Greek Prime minister George Papandreou speaking in the Greek Parliament, June 30, 2010.

The Bank of Greece reported on Monday that the Greek budget deficit plunged in H1 2010 compared with the same period in 2009.

The central bank reported (pdf) that in the first half of 2010, the budget deficit fell to €11.45bn from €19.68bn in the corresponding period of 2009. During this period, budget revenue increased to €23.20bn from €21.74bn last year. Spending fell to €30.14bn compared with €35.59bn in January-June 2009. In June alone, the budget deficit dipped to €1.91bn from €5.06bn a year earlier.

Finance Minister George Papaconstantinou said the country had "met its goal" for the first six months of 2010 after the 41.8% dip in the budget deficit - -  to 4.9% of  GDP (gross domestic product). He also said that the recession could be less serious than originally feared.

The Greek budget deficit of €32.34bn in 2009 was 13.6% of GDP.

"The goal for the year is to reduce the public deficit by 40% and we are doing better than that," Papaconstantinou said, adding that he had "guarded optimism" on the implementation of tough austerity measures agreed in early May with the EU and IMF in return for a 3-year €110m support program.

"A major effort to tidy up the entire state sector is on-going," he said.

"We have adopted measures worth over eight percentage points of GDP to secure a 5.5% deficit reduction (in 2010)," the minister said.

The Greek government has agreed to cut the public deficit to 8.1% of GDP this year.

The economy was expected to contract by 4% this year, when the EU/IMF deal was agreed.

 Papaconstantinou said on Monday, the shrinkage may be 3%.

Government revenues continue to be lower than target, mainly due to low collection of VAT and other taxes in the face of a slowing economy. It would be worse absent a determined effort to cut tax evasion.

 Papaconstantinou said in an interview with Greek daily Mafteboriki, that certain products would be taken out of the low 11% VAT category and be put into the basic VAT category, which carries a rate of 23%.

Another general strike is set for Thursday as parliament debates pension reform, which provides for raising the general retirement age from 61 to 65 years - - public servants usually retire in their 50's.

The German newspaper Bild said last April that anyone who started receiving their pension before 1993 and had been working for 35 years can, according to Eurostat, the EU statistics office, receive an 80% pension (related to average earnings over the last five working years). Anyone beginning after 1993 would get 70%.

In Germany, the number lies between 46 and, in the future, 42%. It is related to the average wage of the entire working life.