Greece can attain its deficit reduction target despite the growing risks, one bank analysis paper argues.

According to Eurobank’s Research Department, the available data show that the country is on course for reducing the deficit to 6.7 percent of GDP in 2012.

It is pointed out that the central government deficit in the first five months was 2 billion euros (or 1 percent of GDP) lower than target, despite much higher expenses for interest payments. Moreover, the primary deficit was 48.5 percent lower than last year’s respective period and 1.9 billion lower than target.

The paper recognizes that the deepening of the recession poses a serious risk to the attainment of the targets at general government level, especially as regards revenues and subsidies to social insurance funds. The size of public sector arrears to private suppliers is also a cause for concern, the study notes.

According to official figures, the overall deficit was 12.9 percent lower in the first half, while the primary deficit was 87.8 percent lower, year-on-year.