Greece’s public deficit for 2011, a key indicator of the country’s economic recovery closely monitored by its creditors, reached 9.6 per cent of output, the development minister said on Wednesday.

Michalis Chrysohoidis said the figure – which is higher than state budget estimates but better than a feared two-digit shortage – was achieved thanks to a successful absorption of European Union support funds.

“The good news is that we have overpassed the memorandum in how EU funds have been absorbed,” the minister told an investment conference with state and business officials from the United Arab Emirates, referring to the economic recovery plan agreed with the EU and the IMF in 2010 in return for bankruptcy-saving loans.

Greece’s 2012 budget, adopted in December, forecast a deficit of 9.0 per cent in 2011 and 5.4 per cent this year.

Greece in 2010 managed to reduce its deficit by nearly five points to 10.6 per cent of output with a tough austerity mandate of spending cuts, wage reductions and tax hikes.

But a shortage of state revenue in 2011 was feared to have negated last year’s equally desperate deficit-reduction efforts.

Despite nearly two years of austerity sacrifices, Athens still needs help with its massive debt of more than 350 billion euros ($A435.59 billion) to stay afloat.

It is currently in talks with private creditors holding Greek state bonds for a 50 per cent debt writedown.

The negotiations will determine the finalisation of a new eurozone bailout worth 130 billion euros ($A161.79 billion) which Greece needs to start drawing from by March to avoid another looming default.