ECONOMY

Cypriot budget stresses reining in the deficit

The Cypriot government yesterday approved the 2004 state budget, which will run a deficit of 600 million pounds ($1.147 billion), as the island prepares for European Union membership next year. The budget approved by the Cabinet provides for 3.4 billion pounds ($6.49 billion) in expenditures, while expected revenues are set at 2.8 billion pounds ($5.35 billion). Priority will be given to infrastructure projects, such as roads, water development works and improving schools and hospitals. The draft budget must now be sent to Parliament for approval. After the Cabinet meeting Finance Minister Marcos Kyprianou said the expanding fiscal deficit would be reigned in next year to around 3.7 percent of gross domestic product (GDP) compared to 5.4 percent in 2003 and 3.5 percent the year before. The government is looking at belt-tightening measures to reduce fiscal deficit, which is way above the 3 percent EU convergence criteria. As part of the belt-tightening measures, spending on development projects is expected to be curtailed by about 25 million pounds to 350 million, the daily Phileleftheros reported yesterday. The current administration has blamed the previous government for leaving it with huge debts and unrealistic commitments. However, Kyprianou believes it is a «realistic and attainable target» to reduce the fiscal deficit to between 2.0 and 2.2 percent of GDP by 2006. (AFP/Reuters)