UPDATE 3-Greek 2010 deficit seen at about 9.3 pct of GDP- source

* Greek 2010 deficit seen at 9.2-9.3 pct of GDP -govt source

* Budget gap will shrink less than 7.8 pct target

* Reason is weak revenue growth, 2009 gap’s upward revision

* Eurostat to revise 2009 deficit to around 15.5 pct of GDP

* Jan-Oct budget deficit shrinks but misses targets

(Updates with Jan-Oct budget figures)

By Lefteris Papadimas and George Georgiopoulos

ATHENS, Nov 10 (BestGrowthStock) – Greece will cut its 2010 budget
gap less than previously planned to 9.3 percent of GDP, due to
weak revenue growth and the upward revision of last year’s
deficit, a government source said on Wednesday.

“This year’s (budget) deficit will be revised upwards to
levels around 9.2-9.3 percent of GDP. The figures have not yet
been finalised, there may be minor changes,” the government
official, who declined to be named, told Reuters.

The current projection for the 2010 deficit is 7.8 percent.

Struggling to dig itself out of a debt crisis that shook the
euro bloc, Greece must meet fiscal consolidation targets under a
110 billion-euro bailout agreed with the International Monetary
Fund and its euro zone partners in May to stave off default.

The emergency funding is conditional on Greece delivering on
reforms and targeted fiscal progress. Failure to do so may
endanger instalments.

Officials from the IMF, the European Union and the European
Central Bank will be in Athens next week to monitor progress
ahead of a third disbursement due in November. [ID:nLDE69C08N]

Austerity policies to get the deficit down to below 3
percent of GDP by 2014 have driven the debt-laden country’s 240
billion-euro economy into deep recession, making it harder for
the government to extract revenues and plug the fiscal hole.

Greece’s economy is expected to contract by 4 percent in
2010. Flash third quarter GDP data (GRGDP=ECI: ) is due on Friday.

The slippage is already apparent in interim budget figures.
In the year to October, the central government’s budget gap
shrank by 30 percent year-on-year, less than the 36.9 percent
full-year target foreseen in the EU-IMF bailout plan, finance
ministry data showed on Wednesday.
Analysts are concerned that with Greece missing its budget
targets, further belt-tightening is on the cards, pushing the
economy into an even steeper tail spin.

“Greece will now come under heavy pressure to implement an
even more draconian fiscal squeeze,” said Ben May, an economist
at Capital Economics, in a note.

“The EU, the ECB and the IMF will presumably respond… by
making further loans to Greece conditional on the government
making up this year’s slippage in 2011,” May added.


In its draft 2011 budget, released in early October, Greece
had projected this year’s shortfall would decline to 7.8 percent
of gross domestic product (GDP) from 13.8 percent in 2009.

Last year’s deficit is expected to be revised higher by the
EU statistics agency Eurostat next week. Finance Minister George
Papaconstantinou has said it may top 15 percent. [ID:nLDE69Q0PA]

The government official said: “We estimate the 2009 budget
deficit will reach about 15.5 percent of GDP after Eurostat’s
revision, with a possibility of a divergence in the order of
0.1-0.2 percent.”

The impact on this year’s deficit from the revision would be
0.3-0.4 percentage points of GDP and slippage in revenue growth
this year is estimated around 2.0 billion euros, he added.

Finance Ministry officials were not immediately available to
comment. The government is expected to officially revise 2010
deficit data in its final draft of the 2011 draft budget on

Last year’s fiscal derailment triggered fears of contagion
in the euro zone’s periphery as repeated revisions to the Greek
deficit drove its borrowing costs to prohibitive levels.

On Wednesday, the yield spread between 10-year Greek
government bonds (GR10YT=TWEB: ) and German bunds stood at 908
basis points, highlighting investors’ worries.
(Additional reporting by Renee Maltezou, Ingrid Melander and
Harry Papachristou; editing by Sujata Rao, Ron Askew)

UPDATE 3-Greek 2010 deficit seen at about 9.3 pct of GDP- source