BRUSSELS - Greece's fiscal consolidation program is on track and should allow the country to obtain a second tranche of international aid in September, euro zone finance ministers said on Monday.

"The Greek government program ... is impressive and has outpaced our expectations," Eurogroup Chairman Jean-Claude Juncker told a news conference, summing up a debate on Greece among the currency area's 16 finance chiefs.

European Union Monetary Affairs Commissioner Olli Rehn said: "The Greek program of fiscal consolidation and structural reforms is on track."

Greece's ballooning budget deficit forced the EU and the International Monetary Fund to grant 110 billion euros ($139 billion) in aid to the country. The euro zone later set up a much bigger aid mechanism for other countries to prevent Greek woes spreading to states such as Spain or Portugal.

Juncker said he was confident Greece would receive the second aid installment in September, although an official mission of the EU, the IMF and the European Central Bank must first give the country a clean bill of health in August.

Greece said on Monday it had almost halved its central government budget deficit in the first six months of the year as drastic spending cuts outweighed weaker-than-expected tax revenues.

Greek Finance Minister George Papaconstantinou voiced confidence his government would hit its deficit-reduction targets in the rest of the year.

"Hopefully we will not only hit the target of deficit reduction but even do slightly better," he told reporters.

"We will have done all the reforms that we have committed to and already we passed a major pension reform a few days ago, and we will see whether growth is better."

Greece's goal is to cut its deficit to 8.1 percent of gross domestic product this year from 13.6 percent in 2009.

Papaconstantinou also said Greek banks should generally show good results in stress tests planned throughout the 27-nation EU, but those that showed weakness would be helped.

"We think they will all be able to pass the stress tests but if there is a need to increase capital requirements, they will be asked to do so, and if they cannot do so with their own shareholders the financial stability fund will have preferential shares in those banks," he said.

Source: Reuters
(Reporting by Sarah Marsh and Marcin Grajewski, editing by Dale Hudson)