Draft budget figures released by the Greek government Sunday indicate that despite taking harsh austerity measures to avert bankruptcy, the country will miss a deficit target.
The 2012 draft budget approved by the Cabinet on Sunday predicts a deficit of 8.5 percent of GDP for 2011, missing the 7.6 percent deficit target, Reuters reported.
The Finance Ministry announced Sunday that the missed target was due to a deeper-than-expected recession, with the economy contracting by 5.5 percent instead of the 3.8 percent estimate made in May. It implied the deficit could even exceed this level by the end of the year unless all new austerity measures were implemented.
“Three critical months remain to finish 2011, and the final estimate of 8.5 percent of GDP deficit can be achieved if the state mechanism and citizens respond accordingly,” the Finance Ministry said in a statement.
European leaders are trying to stop Greece from going bankrupt, which would potentially lead to the bankruptcy of European banks and drag the world into a new financial crisis. However, without yet another bailout, Greece is expected to run out of cash by the end of October.
The Cabinet met Sunday night to approve the 2012 budget and complete a plan to cut civil service staff by 30,000 by the end of the year