Greece misses deficit target in January – August

Greece missed its deficit cutting target for the first time this year, provisional finance ministry data for the January-August period showed on Friday, due to heavy debt payments and worse-than-expected revenues.

The budget deficit of the country's central government shrank at an annual pace of 32.2 percent to 14.49 billion euros ($18.38 billion) in the first eight months of the year, less than the 39.5 percent cut targeted for 2010 as a whole.

"The deficit cut drive has temporarily slowed because of a large accumulation of interest payments in July and August, which account for about 40 percent of the annual debt service, but also because of a revenue shortfall," the finance ministry said.

Greek shares extended losses on Friday after the budget data cast doubts on whether the country would achieve its 2010 fiscal goals. The benchmark stock index <.ATG> stood at 1,584.26 points at 0941GMT, down 1.7 percent from Thursday's close.

The government said the latest figures are a temporary slippage and still remained within a partial January-August target to slash the deficit by 26.5 percent. Greece has pledged to slash its deficit to 8.1 percent of GDP in 2010 from 13.6 percent last year, in exchange for a 110-billion-euro EU/IMF bailout that saved the debt-laden country from a debt crisis that shook the euro.

Net tax revenues between January and August rose by 3.3 percent year-on-year, short of an annual 13.7 percent target, as austerity-driven policies have plunged the country into its worst recession in almost 40 years.

The figures released on Tuesday refer to the central government deficit, which excludes spending by local government and social security organisations, and not to the general government shortfall measured under euro zone rules.