Greece has been racing to complete Olympic building projects on time

Petros Doukas said Greece's budget deficit was "heading towards 4%, maybe a bit over".

Under the EU's Growth and Stability Pact, eurozone member states must maintain deficits of below 3% of gross domestic product.

Greece's budget deficit has already breached the EU cap in 2003.

EU finance ministers have given Athens until 5 November to announce measures aimed at reining in the county's spiralling deficit by 2005.

Defence cuts

Mr Doukas told Greece's Flash radio that total spending on the Athens Games - which open on 13 August - could rise to 7 billion euros ($8.4bn; �4.6bn), from an original government estimate of 4.6 billion euros.

Organisers of the games have been racing to complete work on venues built to stage the Olympics, drastically pushing up costs as contractors deploy double and triple working shifts.

Mr Doukas said Greece was facing cutbacks in spending in a bid to cut its deficit, although he indicated that cuts were unlikely in areas such as salaries or pensions.

"What we can try and do as much as possible is cut the defence spending, bring the private sector in as much as possible into public works projects so that they are self-financed, do away with unnecessary spending, and of course speed up privatisations," he said.

Last month, the European Court of Justice annulled a decision by EU finance ministers to suspend action against Germany and France over budget deficits.