Greece Sees 2011 Budget Deficit at 9%

The Wall Street Journal

By ALKMAN GRANITSAS, STELIOS BOURAS and MATINA STEVIS

ATHENS—Greece said Friday that it would miss its 2011 deficit targets with a gap equal to 9% of gross domestic product, and laid out two separate targets for next year depending on the outcome of a planned €100 billion debt write down.

According to the final 2012 budget, submitted to parliament Friday, Greece's budget deficit will reach €19.68 billion this year.

That compares with a targeted €17.1 billion deficit that Greece promised its international creditors—the European Union and the International Monetary Fund—just six weeks ago when it unveiled its first budget draft.

For next year, the government is aiming for a budget deficit of 6.7% of GDP, or about €14.2 billion, in line with its prior commitments, but which doesn't include ongoing talks about a massive write-down in the debt Greece owes its private sector creditors.

That plan would cut the €206 billion owed to private lenders in half and sharply reduce Greece's annual interest payments by about €4.5 billion. In 2012, Greece expects its debt servicing costs to reach €17.9 billion.

Taking into account the sharply lower interest payments, Greece's budget says the deficit would fall to 5.4% of GDP, or about €11.43 billion.

"For the first time in the last decades, the Greek parliament is called upon to discuss and ratify the general budget... under conditions of great crisis and pressure," said Finance Minister Evangelos Venizelos. "The budget is a work tool to exit the crisis."

Meanwhile, Mr. Venizelos said the country's 2012 budget targets a primary budget surplus of 1.1% of economic output, adding that no further tax measures are included in the plan.

Speaking to lawmakers shortly before submitting the final budget draft to parliament, Mr. Venizelos described current conditions as "exceptionally difficult" for Greece but said the formation of the new coalition government was a positive sign.

Greece's parliament is expected to vote on the budget Dec. 7.