UPDATE 1-Greece may beat 2012 primary budget gap target- source
* 2012 primary budget gap seen at 1.2 pct of GDP
* Medium-term fiscal plan target was 1.5 pct
ATHENS, Jan 4 (Reuters) - Greece may end 2012 with a better-than-targeted primary budget gap, a finance ministry official said on Friday, suggesting a modest fiscal success for the euro zone's first bailout recipient.
Greece's primary budget balance, which excludes debt servicing costs, was forecast at 1.5 percent of gross domestic product (GDP) under the country's medium-term fiscal plan.
"The primary budget gap in 2012 will be lower than 1.5 percent, around 1.2 percent," the senior official, who declined to be named, told Reuters.
Athens has been scrambling to cut deficits and emerge from a debt crisis, applying fiscal austerity prescribed by its international lenders to turn its primary budget gap into a surplus this year.
Based on the government's 2013 budget plan, Athens is aiming at a primary surplus of 0.4 percent of GDP in 2013, for the first time since 2002.
But the country's medium-term fiscal plan and the EU Commission both project a balanced primary budget this year as they do not take into account so-called ANFA proceeds - money that Athens will get from euro zone central banks on their Greek government bond holdings.
Greece has come a long way in correcting the fiscal derailment that sparked its debt crisis in late 2009 but still has some way to go before it begins to generate sustainable surpluses in its primary budget balance.
Its overall budget deficit, which ballooned to 15.6 percent of national output in 2009, was reduced to 9.4 percent in 2011. It is projected to fall to 5.2 percent this year under the government's budget plan that was voted in parliament last year.
In its latest review of the country's economic adjustment efforts, the EU projects this year's deficit at 4.6 percent of GDP, taking into account reduced interest payments after a debt buyback in December and debt relief measures on official loans.
The EU is more optimistic than Athens on how the economy will fare in 2013, projecting a 4.2 percent recession versus a 4.5 percent GDP decline forecast by the Greek government.