By Michele Kambas - Reuters

NICOSIA – Eurozone hopeful Cyprus expects to achieve a near-balanced budget by 2010 by holding down costs and monitoring spending more closely, the Finance Ministry said yesterday.

Cyprus, which hopes to adopt the euro as its currency on January 1, 2008, is pursuing a convergence program designed to keep its deficit below 3 percent of GDP and keep a lid on its public debt levels.

The Convergence Report, a Finance Ministry roadmap of Cypriot progression to the eurozone from 2006 to 2010, offers an upbeat assessment. The budget deficit is meeting forecasts of easing to 1.9 percent of gross domestic product (GDP) by the end of this year from 2.4 in 2005, and to 0.1 percent by 2010.

Spending curbs were expected to account for the bulk of the adjustment, contributing a cumulative 1.7 percent of GDP in savings from 2007 to 2010, while revenue improvements represented 0.1 percent of GDP.

The report assessed public debt levels more favorably than previous estimates, forecasting they would subside to 64.7 percent of GDP this year, 60.5 in 2007, and settle at 46.1 percent by 2010.