Cyprus praised by IMF over performance

WASHINGTON (Reuters) – The International Monetary Fund heaped praise on Cyprus on Friday for its strong economy and progress in reforms. But the IMF urged the island republic to stick its 2003 budgetary target. The IMF «commended Cyprus’s longstanding record of strong growth, low inflation, and moderate unemployment, which have allowed the economy to successfully withstand adverse shocks while maintaining macroeconomic stability,» the IMF said in a regular economic assessment. The IMF expects the island’s economy to expand 3.5 percent this year, helped by a rebound in the tourist industry, after growing 2.3 percent in 2002. The IMF warned of Cyprus’s vulnerability to external shocks, meaning that careful policies are necessary. The ratio of public debt to gross domestic product over the medium term should be reduced, but the IMF said the debt load is not a critical problem at the moment. The central bank has been doing a prudent job of conducting monetary policy, the IMF said, adding that a continuation of this would be key to achieving Cyprus’s objective of joining the eurozone as soon as possible.