* Greek '11 deficit to exceed 7.6 pct of GDP goal-sources
* Greece, EU/IMF disagree on degree, cause of overshooting
* EU/IMF inspectors also doubt Greek privatization targets
* Independent budget auditor quits after row with minister
By Ingrid Melander and Lefteris Papadimas
ATHENS, Sept 1 Greece will miss its budget
deficit target this year, the government and its international
lenders said on Thursday, but they disagreed on how big the
fiscal derailment will be and what is to blame.
The dispute is complicating negotiations before release of
a further aid tranche under a 110 billion euro bailout agreed
last year to stave off the debt-choked country's bankruptcy.
The crisis has shaken the eurozone and global markets.
EU/IMF inspectors visiting Athens feel Greece is not
pursuing reforms vigorously enough, while Greek officials say
the main reason for the overshooting is a worse-than-expected,
austerity-induced recession, sources said.
An official close to the inspectors, also known as the
troika, said on Thursday the actual 2011 budget deficit will be
at least 8.6 percent of GDP, compared to a target of 7.6
The official said inspectors found delays and shortcomings
in implementing the bailout plan, which was beefed up in July
by an EU agreement for a second bailout over 109 billion
"The deficit is certainly at least one percentage point
higher than the target," the source told Reuters. "We are still
counting ... 8.6 percent (of gross domestic product) is the
The official, speaking on condition of anonymity, said the
gap had three sources -- the economy doing worse than expected,
new measures not implemented as agreed and older measures
yielding less than expected, in particular taxes.
The official said it was much too early to say if the 8
billion euro tranche of aid, to be disbursed later in
September, was at risk.
The Greek government, by contrast, estimates the deficit
overshoot will be smaller, at about 8.1 to 8.2 percent, mainly
because of the deeper-than-expected recession.
"The troika estimates that the deficit will be at 8.5 to
8.6 percent in 2011," a government official who declined to be
named told Reuters. "They attribute this for about one-fourth
to the recession, and say (the gap) is mainly due to delays in
the implementation of the mid-term fiscal plan."
Greek finance ministry experts expect the economy to
contract by more than 4.5 percent this year, and possibly more
than 5 percent, versus a previous EU/IMF projection of 3.9
Austerity policies of tax hikes and wage cuts have plunged
Greece into its third consecutive year of recession, with
economic contraction in 2011 headed to the deepest in almost 40
Faced with the downturn, the troika is pushing Greece to
accelerate privatisations, deregulation and deficit cuts, the
Greek government official said.
"They are insisting that the Greek government must speed up
privatisations," he said. "They are also asking for a faster
implementation of the labour market and pension fund reforms."
Reforms to liberalise closed-shop professions such as taxi
drivers and cut state spending have already led to a wave of
strikes over the past months, often accompanied by violent
clashes between demonstrators and police.
Greece's Socialist government has lost its poll lead over
the opposition conservatives, who oppose the austerity policy.
The inspectors also doubt Greece will manage to raise 1.7
billion euros in privatisations by the end of this month, a
second key requirement for future aid payments.
"The government thinks it can achieve the targets but we
have serious doubts," the official close to the troika told
Reuters. Greece has so far raised just 400 million euros from
state asset sales.
Adding to the Greek government's embarrassment, the chief
of an independent parliamentary budget committee resigned late
on Thursday after the country's finance minister attacked the
group for saying Greek debt was unsustainable.
Economist Stella-Savva Balfousia submitted her resignation
to House Speaker Filippos Petsalnikos, top government and
parliament officials told Reuters.
Balfousias' committee had said on Wednesday that Greece's
debt dynamics were "out of control" and that the government was
failing to restore public finances. For details, see
Finance Minister Evangelos Venizelos on Thursday attacked
the independent committee, saying it lacked credibility and
that he would take measures to upgrade and improve it.
The committee was appointed by the Finance Ministry in 2010
as part of efforts to increase the transparency of the
country's murky public finances.
Balfousia, who was not available to comment, was also a key
player in a previous panel of experts that unearthed
statistical irregularities and manipulations used to conceal
the true state of Greece's finances under the previous,
(Additional reporting and writing by Harry Papachristou;
Editing by Dan Grebler)