NICOSIA (Reuters) – Cyprus may require further measures to support longer-term sustainable growth, although the economy has fared better than its European peers from the global economic crisis, its central bank said yesterday. The bank, whose governor, Athanasios Orphanides, is on the Governing Council of the European Central Bank, met with a team from the International Monetary Fund yesterday, on the island as part of an annual consultation process. “It was jointly noted that Cyprus was not unaffected by the crisis, but, relative to other European countries, it was to a lesser degree,” the central bank said in a statement. “Both sides expressed the view that with the appropriate measures, Cyprus can deal with the crisis and lay the foundations again for long-term sustainable development.” It did not specify what measures. The Cypriot government expects a 2-percent fiscal deficit in 2009, from a 0.9-percent surplus in 2008.

BODRUM, Turkey (Reuters) – Turkey and the International Monetary Fund held very useful talks on a long-awaited new lending agreement yesterday, the Fund’s No 2 official said, and the Turkish economy minister said their views were close. Speaking after meeting IMF First Deputy Managing Director John Lipsky, economy minister Ali Babacan confirmed that both sides would stay in touch in the next few weeks. Economists welcomed the four-hour meeting and said it brought fresh momentum to talks on a deal, which markets want in order to remove any risk that Turkey will have difficulty rolling over billions of dollars in debt in the coming months. “We saw that our views and our work are close to an important degree,” Babacan told reporters after the meeting which included treasury undersecretary Ibrahim Canakci.

Serbia faces a tough choice of enforcing new spending cuts or raising taxes in order to meet the International Monetary Fund’s fiscal conditions for disbursing a badly needed 3-billion-euro loan. According to the latest figures, Serbia’s budget deficit will reach 4 percent of GDP, overshooting the 3-percent target agreed with the Fund. The IMF said the country will have two options – to raise value added tax or cut spending. “A tax hike will only fuel inflation,” central bank governor Radovan Jelasic told Belgrade Studio B television late on Thursday. “On the other hand, cutting salaries and pensions is never a popular measure.” Economy Minister Mladjan Dinkic said this week his government would try to negotiate a higher deficit with the IMF. (Reuters)

The European Union said yesterday that Bosnia had violated a regional trade pact and its commitment toward the bloc by adopting a law aimed at protecting domestic production. “This is a violation of Bosnia-Herzegovina’s obligations under the CEFTA agreement,” a statement from the EU’s Bosnian office said, adding it “regrets the adoption of the law.” (AFP)