Cyprus sticks to 2.5% deficit target despite EU forecast
Baku, May 11 (AZERTAC). Cyprus said Friday it would stick to its public deficit target of 2.5 percent of GDP for 2012 soon after the European Commission predicted it would reach 3.4 percent.
The commission`s revised forecast also said the Cyprus economy would shrink 0.8 percent of GDP this year, higher than the government`s estimate of a 0.5 percent contraction.
“The ministry of finance, through intensive dialogue with political parties and social partners, aims to implement the necessary measures, especially on expenditure, to ensure the objective of a 2.5 percent budget deficit is reached,” a ministry statement said.
“The projections show that during 2012 there will continue to be major challenges for the Cypriot economy, mainly because of the negative external environment, as well as exposure of our banking sector to Greece,” it added.
Finance Minister Vasos Shiarly has repeatedly said the government will introduce additional austerity measures to ensure the deficit is slashed to 2.5 percent from a bloated 6.3 percent in 2011.
New measures have yet to be announced but they are not expected to include new taxes as the government seeks to get the deficit to below the EU-required 3 percent of GDP this year.
The Cyprus economy is struggling to find its way out of recession, and there are fears the cash-strapped government may need to step in to bail out the island’s large banking sector which is heavily exposed to toxic Greek debt.
Other news in this section
