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Greek beats budget target but revenue still weak

A woman passes outside a closed shop as a poster reads in Greek '' yes to work, no to the euro'' in Athens, Wednesday, April 10, 2013. The European Union's statistics agency, Eurostat, on Wednesday said that labor costs had sunk 11.2 percent in recession-hit Greece between 2008 and 2012, compared to the eurozone average increase of 8.7 percent. (AP Photo/Petros Giannakouris)

ATHENS, Greece (AP) -- Financially struggling Greece said Wednesday it achieved a primary budget surplus of 508 million euros ($665 million) in the first quarter despite weakening revenues, beating targets agreed with rescue lenders, and managed to lower its deficit more than expected last year to 6 percent of output.

The January-March budget figure doesn't include interest payments on debt.

The Finance Ministry said state revenues for the quarter were 10.87 billion euros ($14.22 billion) instead of the targeted 11.22 billion euros ($14.68 billion).

Greek officials continued discussing further budget cuts with bailout lenders Wednesday, without reaching an agreement that would allow the release of the next installment of the country's rescue loans. Such cuts have contributed to a deep recession expected to reach 25 percent over the past six years and caused deflation — a drop in consumer prices on an annual basis — for the first time in 45 years.

Greece has relied on international bailouts since May 2010, provided on condition of deeply resented income cuts, tax hikes and reductions in all forms of state spending — including health, welfare and education.

Finance Minister Yiannis Stournaras said the talks would continue next week.

Stournaras said that while long-dragging, the negotiations are not stalled.

"There are very many issues (under discussion)," he said. "There is no problem concerning the next (loan) installment."

The main issues at stake are ways of streamlining the country's civil service and reforming the public sector.

Also Wednesday, the country's statistical authority said the 2012 deficit was 6 percent of Gross Domestic Product, or 11.6 billion euros — better than the budget forecast of 6.6 percent — although an extra 7.7 billion euros provided to support battered Greek banks pushed up the deficit to a provisional 10 percent of GDP.

But officials said the final figure for 2012 would not include the bank support, as that is a one-off calculation that will be revised once the lenders are recapitalized.

The EU statistics agency meanwhile said labor costs in Greece had sunk 11.2 percent between 2008 and 2012, compared with an 8.7 percent rise across the eurozone.