NICOSIA – EU candidate Cyprus will increase the retirement age for civil servants, revise debt repayment methods, outsource more and increase royalties to cut a 5.4 percent fiscal deficit to 2.2 percent by 2006. Cyprus is one of 10 countries which will accede to the European Union next May. It has set a target of joining the eurozone, which dictates a deficit of less than 3.0 percent, by January 2007. A 14-point game plan to trim rogue fiscal indicators is included in Cyprus’s Pre-Accession Economic Program submitted to Brussels. The cornerstone of the government’s policy is to achieve sustainable growth and progressively reduce general government net borrowing, according to the report, released late on Monday. Sluggish growth of the tourism-reliant economy and wide-ranging tax reforms introduced in the summer of 2003 have sapped government revenues, dramatically upping the fiscal shortfall to its highest level since 1998. Possibly one of the most contentious elements of the plan is to increase the retirement age of public servants to 63 from 60 by the end of 2004. Policy reforms on pensions also includes the possibility of increasing the pension age to 65 in stages to 2011. Other known strategies include tax concessions to people who have avoided paying tax, an introduction of spending ceilings on defense and a revision of fees and royalties in government departments. Technocrats also float the possibility of outsourcing work now done by government services. The public works department and the water development departments were mentioned as examples. The introduction of tax compliance and collection of arrears is expected to bring additional tax receipts to the order of 1.3 percent of GDP by 2006, while the revision of fees and royalties are projected to add a further 1.1 percent, the report said. General government gross debt, excluding their dues to the social security fund, is projected to hit 63.5 percent of GDP this year. By 2006 authorities expect it to fall to 56.1 percent. Curtailing debt will be achieved by a progressive reduction of general government net borrowing, the report said. Cyprus also plans to abolish a 35-year-old practice of creating sinking fund deposits for the repayment of long-term loans. Payments were made to the fund on an annual or biannual basis to accumulate the nominal value of the long-term debt. The practice, however, had the tendency to increase general government financing requirements, the report said.