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Greece's budget deficit will be lower than expected next year, despite a shrinking economy, after spending cuts and a write-down on the country's debt agreed as part of a European bail-out.
The amount of interest the Greek government must pay on its debts will fall to €12.75bn in 2012.
Agencies 12:06PM GMT 18 Nov 2011
Greece's deficit is now expected to fall to 5.4pc of GDP in 2012, down from 9pc this year, and below the previous forecast of 6.8pc.
The improvement is even more remarkable because Greece's economy is expected to shrink by 2.8pc next year, worse than the 2.5pc contraction predicted only last month.
The fall in the deficit arises from the expected cancellation of €100bn (£86bn) in privately-held Greek debt agreed last month, as well as savings achieved by the government.
The amount of interest the Greek government must pay on its debts will fall to €12.75bn in 2012, from €16.38bn this year following the debt deal, which is still being thrashed out but is due to be implemented early next year.
Without the deal, made by eurozone leaders with the banks as part of a wider rescue package agreed during an all-night summit in Brussels last month, the payments would have been €17.9bn, according to the budget figures.
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