Greece narrowed its central government budget deficit, excluding local authority and social security spending, by 37 percent in the first nine months of 2012, the finance ministry said on Thursday, but revenues were still off target.

Spending cuts reduced the budget gap to 12.6 billion euros ($16.3 billion) from 20.1 billion in the same period last year.

The figures exclude key elements of the general government budget, which is the one used by the European Union to assess Greece's fiscal performance under an EU/IMF bailout program.

Mired in recession, Greece is struggling to meet the targets set under two bailouts since 2010 totaling more than 200 billion euros ($258.03 billion).

Despite fierce tax hikes, net government revenue stagnated at 36.7 billion euros, 1.3 billion euros short of an interim target set by the bailout plan, the figures showed.

In a bid to make up the shortfall, the finance ministry has slashed investment by about a fifth, further hurting the economy. It also cut back on primary spending, before interest service costs, by 9 percent, partly by suspending payments to government suppliers and state workers.

(Reporting by Harry Papachristou)