Debt-crippled Greece’s budget deficit is expected to hit 9.6 percent of economic output in 2011, about half a percentage point above target, the development minister admitted Wednesday.
Michalis Chryssochoidis said that an increase in the use of European Union structural development funds had contributed to lowering government overspending from 10.6 percent of gross domestic product in 2010.
“The good news is that absorption of European Union funds has exceeded all expectations,” Chryssochoidis said at an economic forum near Athens where the government hopes to attract investment from the United Arab Emirates.
But Greece, which is relying on billions in rescue loans from its European partners and the International Monetary Fund to keep afloat, had pledged to cut the 2011 deficit to 9 percent of GDP.
Fitch Ratings said on Wednesday that Greece’s financial troubles could still worsen the eurozone crisis if it can’t work out a debt reduction deal with creditors, part of the second bailout package.
Fitch’s head of sovereign ratings David Riley said Greece “still has lots of potential to plunge Europe into crisis” and that “time is running out.”