ECONOMY

Cyprus introduces austerity budget with a view to eurozone entry by 2007

NICOSIA (AFP) – The Cypriot Cabinet yesterday approved an austere budget aimed at getting the island nation into the eurozone by 2007. The 2005 budget provides for 3.54 billion Cyprus pounds (6.12 billion euros) in spending with a shortfall of 827 million pounds (1.43 billion euros). Finance Minister Makis Keravnos said the budget was a «stabilizing» one, geared toward curbing public spending and «achieving convergence targets.» He said the budget still retained a «social character,» but would also help contain the fiscal deficit to 2.9 percent of GDP, slightly below the EU-prescribed 3 percent ceiling. The 2003 deficit topped 7 percent. Nicosia said it is meeting other economic targets, such as keeping inflation under 3 percent and pushing economic growth back up to near 4 percent in 2004. The budget includes a freeze on new public sector jobs and pay until 2007. Public sector salaries make up 60 percent of state expenditures. Other austerity measures proposed include increasing retirement age in the civil service from 60 to 63 and raising the general pensionable age from 63 to 65.