UPDATE 1-Greek Jan-Apr govt deficit narrows 41.8 pct y/y

ATHENS, May 10 (Reuters) - Greece's central government deficit narrowed by 41.8 percent in the first four months of 2010, the finance ministry said on Monday, boding well for the debt-laden country's goal to slash its budget gap this year. The central government shortfall dipped to 6.283 billion euros ($8.43 billion) from 10.791 billion in the same period last year, preliminary figures showed. Debt-laden Greece has pledged to slash its budget deficit by 5.5 percentage points to 8.1 percent of gross domestic product (GDP) this year, adopting tough austerity measures to qualify for a 110 billion euro bailout by euro zone peers and the International Monetary Fund. "The government seems to be on track to meet its deficit cut targets," said Nikos Magginas, an economist with the National Bank of Greece. Net revenues rose by 10 percent, partly helped by a value-added tax (VAT) increase announced in March. Net spending before debt payments declined by 8.7 percent, more than the government's 4.4 percent target. The figures do not contain local government and social security budgets, which are included in deficit figures the country must submit to the European Union. The improvement in finances was also reflected in central bank data released separately on Monday, showing the government's net borrowing requirement at 7.7 billion euros, 28 percent lower than in the same period last year. Greece announced a new round of tax increases and public sector pay cuts last week to help it meet its ambitious deficit targets. But austerity measures will dampen economic activity, with GDP seen contracting by 4 percent this year, according to government estimates. Industrial production shrank by 3.7 percent year-on-year in March, compared with 9.2 percent in February, Greece's statistics agency announced on Monday. (Reporting by Harry Papachristou) ($1=.7453 Euro) Keywords: GREECE DEFICIT/ (harry.papachristou@thomsonreuters.com; +30 210 3376455; Reuters Messaging: harry.papachristou.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

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