Greece’s three-year fiscal consolidation plan targets a budget deficit of 2.8 percent of GDP in 2012, the finance minister has announced.

Greece, whose fiscal ills have prompted ratings downgrades and higher borrowing costs, is under pressure from markets and EU peers to take drastic action to restore its public finances.

“According to the plan, the deficit in 2010 will be cut by four percentage points, from 12.7 to 8.7 percent of GDP,” George Papaconstantinou told a cabinet meeting.

“In 2011 it will be cut further by three percentage points to 5.6 percent of GDP. In 2012, by 2.8 percentage points, falling to 2.8 percent of GDP.”

The so-called stability plan is the roadmap to return to fiscal health and seen as key to boosting Greece’s credibility as markets worry whether the country’s socialist government can implement the required belt tightening without social unrest.

For financial markets, the government’s ability to enact it will be the key.

The plan will be submitted to the EU executive on Friday, Greek Prime Minister George Papandreou told the televised meeting.

“The efforts in the next three years will be decisive for the country’s course,” Papandreou said. “The targets are achievable, we can do it.”

Papaconstantinou said Greece’s ballooning debt will start declining in 2012 and will be at 113.4 percent of GDP in 2013.

The text of the plan has not yet been made public.

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