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Greece says primary budget surplus means it on track to hit EU-IMF targets

Greek Deputy Finance Minister Christos Staikouras addresses reporters after a news conference in the Finance Ministry in Athens May 10, 2013
Greek Deputy Finance Minister Christos Staikouras addresses reporters after a news conference in the Finance Ministry in Athens May 10, 2013

By Harry Papachristou and Lefteris Papadimas

ATHENS (Reuters) - Greece said on Tuesday its budget was in surplus, not counting interest payments, and that it was on course to hit fiscal targets and fulfill conditions to seek additional debt relief from its international lenders.

The central government had a primary budget surplus of 2.92 billion euros ($3.87 billion) between January and August, the finance ministry said.

It compares with an interim target for a deficit of 2.5 billion euros in the period, it said.

Reaching a primary surplus this year is the main goal of the debt-laden country's government. Hitting that target would trigger a clause in its international bailout allowing Athens to seek additional debt relief from its lenders.

The reading announced on Tuesday, however, provides just an approximate indication of how Greece's finances are shaping up.

It is not directly comparable with its bailout targets as it excludes the budgets of local government and social security funds and includes one-off revenue from euro zone central banks.

It is also on a cash basis, whereas the budget figures against which Greece's performance will be judged are based on an accrual basis, which classifies revenues and expenses differently.

But Deputy Finance Minister Christos Staikouras said he was confident Greece would be in the black at the end of the year. "The target to reach a surplus at the end of the year becomes more and more feasible," he said.

Austerity has helped Greece cut its primary deficit by 9.2 percent of gross domestic product in 2010-2012, one of the largest fiscal improvements recorded worldwide.

It has come at a cost of huge unemployment and a deep economic recession-cum-depression, now in its sixth year.

But the country's lenders say Athens still risks missing its future targets, as austerity-hurt households might prove unable to cope with a planned tax onslaught in the coming months.

To compensate for a 713 million euro shortfall in tax revenues in the first eight months of the year, Greece cashed in more European Union subsidies than scheduled. It also spent far less on public investment and on tax refunds than planned.

Such factors account for about half of the 5.5 billion euro target overshoot recorded, the figures showed.

The figures also include about 1.5 billion euros in one-off revenue from euro zone central banks. This money derives from profits which the central banks earned from Greek government bonds they held and which they returned to Athens under the terms of its international bailout.

(Editing by Jeremy Gaunt)

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