Under the recovery programme, Greece had pledged to reduce its deficit to 7.4 per cent this year. - File photo

ATHENS, Sept 2: The EU and IMF left a critical audit of Greek finances unfinished on Friday saying more budget work was needed, and the government admitted its deficit target is in trouble.

But he rejected suggestions of a split between Greece and the EU and International Monetary Fund.

A statement by auditors from the European Union, European Central Bank and IMF was couched in conciliatory language, but a source close to the mission privately criticised delays in promised reforms in Athens.

Venizelos told a news conference: “The deeper recession automatically leads to a revision of the fiscal target in relation to the deficit.”

Under the recovery programme, Greece had pledged to reduce its deficit to 7.4 per cent this year.

This is now a forlorn hope, the minister acknowledged, pointing to a recession deeper than estimates agreed in May with the EU, IMF and European Central Bank.

For a given volume of deficit, if the size of the economy shrinks, the deficit ratio automatically rises.

Venizelos said the contraction in the Greek economy this year will now be “very close to 5.0 per cent” compared to a previous forecast of 3.5 per cent.

He added that there was no truth to reports that talks between Greece and the “troika” of the EU, IMF and ECB had stalled or that credit lines to Athens were under threat.

“We had agreed since the start of the week to end this round of talks on Thursday,” the minister said.

He did however say that Greece preferred to borrow rescue funds on terms agreed in a second EU bailout in July rather than under rescue terms agreed in 2010.

The EU-IMF-ECB mission which left Athens on Friday said that “good progress” had been made on a fresh revamp of Greece's finances, but that more time is needed to draft a new 2012 budget.

Privately, however, a source close to the mission said the visit had been interrupted because of “unfinished work” by the Greek authorities.

“The fiscal measures are not there, the list of privatisations is not finalised and there is still no uniform salary system for civil servants,” the source told AFP.

“The mission has made good progress, but has temporarily left Athens to allow the authorities to complete technical work, among other things, related to the 2012 budget and growth-enhancing structural reforms,” the European Union and International Monetary Fund said in a joint statement.

The experts had been in Athens since Monday “discussing recent economic developments and reviewing policy implementation.”

The latest developments in Greece helped drag down European stock markets on Friday, and came as eurozone states are still wrestling with the details and approving the new 159-billion-euro bailout.—AFP