Greece’s budget deficit has worsened but is likely to be contained to 10 percent of gross domestic product (GDP) this year, the Bank of Greece Governor, George Provopoulos, said on Thursday.

“I am optimistic that it (2009 budget deficit) will not exceed 10 percent,” Provopoulos told reporters after meeting with new Prime Minister George Papandreou.

Provopoulos met with Prime Minister George Papandreou, Deputy Prime Minister Theodoros Pangalos, Finance Minister George Papaconstantinou and Economy, Competitiveness and Shipping Minister Louka Katseli.

Provopoulos stated that he had an in-depth discussion with the Papandreou and his ministers, pointing out that he briefed them on the discussions held within the framework of the International Monetary Fund (IMF)-World Bank annual meeting in Istanbul and on the alarming fiscal developments, focusing on ways to solve the existing problems.

His meeting with the senior Government figures came after Provopoulos took part in the annual meeting of the International Monetary Fund and the World Bank in Istanbul earlier in the week.

Provopoulos said in Istanbul that the strong parliamentary majority enjoyed by the new elected Papandreou government will enable it to move ahead with much needed reforms but warned that the budget deficit will be considerably higher than the 6 percent mark.

Provopoulos said a reform program can be combined with a growth agenda for the 250-billion-euro economy.

“The broad support the newly elected government has received will help it enormously to implement a needed program of reforms,” he said.

Asked about the expected level of the budget deficit for 2009, Provopoulos said it appears to be moving above 10 percent of gross domestic product.

The Economy and Finance Ministry had said before the elections that the budget deficit is projected at around 6 percent of GDP, versus a previous forecast of 3.7 percent.

The Greek government last week submitted its latest estimates for the 2009 budget to the European Commission. Brussels is expected to publish its own estimates on the Greek budget and economy in the Commission’s fall report on November 3.

The head of the country’s central bank added that Greece needs to take steps to boost its competitiveness in order to maintain the high growth rates seen in the past.

In order to boost competitiveness and overcome problems in the economy, a long-term fiscal reform plan is needed that will help the government borrow at cheaper rates and boost private sector investments, he said.