Greece close to missing annual deficit targets

Greece is close to missing this year's deficit reduction targets that were agreed with the EU and the IMF in return for huge bailouts, official data showed on Thursday.The finance ministry said the public deficit -- a key cause of the country's economic ills -- had risen to 14.69 billion euros ($20.9 billion) six months into the year, largely due to health and social fund debts. Greece has agreed with creditors on a targeted public deficit of 16.68 billion euros for all of 2011, or 7.4 percent of output. Greece is supposed to be reducing its public deficit under the terms of economic bailouts from the European Union and the International Monetary Fund. But the cost of government continued to rise despite sweeping cuts to civil servant salaries and ministry budgets last year. Under revised EU rules, Athens is now forced to take into account the debts of state entities such as local councils, hospitals and social security funds. This restriction, along with a worse-than-expected recession, also caused it to miss last year's deficit goals. State hospitals owed over 1.8 billion euros at the end of June while social security funds were in the red by 2.66 billion euros, the ministry said. Greece's fiscal woes have impacted the euro and put the spotlight on other eurozone economies with debt concerns or weak growth prospects such as Spain and Italy. Eurozone leaders last month agreed a second rescue package for Athens worth 109 billion euros ($158 billion), plus about 50 billion euros in largely rolled-over debt from the private sector over the next three years.