ECONOMY

Cyprus monitoring to end

BRUSSELS – The European Commission recommended yesterday the end of the monitoring process for Cyprus’s compliance with the Stability Pact, after the country’s fiscal deficit dropped from 6.25 percent in end-2003 to just 2.4 percent in end-2005 and may get close to zero soon. «The Cypriot case proves that budgetary consolidation undertaken with resolve can achieve sustainable results,» said Economic and Monetary Affairs Commissioner Joaquin Almunia in a clear message to countries, such as Greece, which still have some way to go to improve their finances. He instructed Nicosia to «pursue this route and achieve its objective of having finances close to balance by the end of the decade, given the high risk arising from the costs of an aging population.» «Where there’s a will, there’s a way,» commented the Commission in its recommendation to the Council of Economy and Finance Ministers (ECOFIN) which will decide on July 11 to relieve Cyprus from the process which includes 11 of the EU’s 25 member states. They are Greece, Germany, France, Italy, and Portugal from the eurozone, and Great Britain, the Czech Republic, Hungary, Malta, Poland and Slovakia. Besides Cyprus reducing its deficit, another crucial factor leading to this decision has been the Commission’s prediction that the country’s debt and the deficit will decline further this and next year, with the debt approaching the reference rate of 60 percent of gross domestic product and the deficit dropping close to zero. «That points to a durable correction of the excessive deficit, thanks to the substantial and largely structural measures taken by the Cypriot authorities,» the Commission commented in a statement issued yesterday. This will make Cyprus the first new EU member to exit the «excessive deficit procedure.»