ECONOMY

Cyprus to apply next month for eurozone entry in Jan 2008

NICOSIA (Reuters) – Cyprus will apply next month to join the eurozone on January 1, 2008, Finance Minister Michalis Sarris said on Friday. «We will send a letter to the European Central Bank and the European Commission next month stating that we intend to adopt the euro by January 2008 and will invite them to come and assess the economy,» Sarris told Reuters. «(The assessment) will be in March, April, and then it will go to the Economic and Financial Committee, to Ecofin and then to the EU heads of state in July,» Sarris said. If it is deemed ready, the Cyprus pound, which entered the EU’s exchange rate mechanism ERM-2 in 2005, will be locked against the euro at an irreversible exchange rate for conversion. That is expected in mid-2007. Cyprus has been following an austerity program since 2004 which has slashed its budget deficit from above 6.0 percent of GDP to a projected 1.6 percent in 2007. Its public debt was forecast to fall to 60.5 percent of GDP this year from 64.7 percent in 2006. According to a government economic convergence roadmap released last December, Cyprus is aiming for a public debt of 46.1 percent by 2010, and a deficit of 0.1 percent. In December, the European Central Bank and the European Commission assessed that Cyprus met three of the five eurozone criteria. They were convergence on its public debt and deficit levels, convergence of its long-term interest rates to those in the eurozone, and keeping inflation within 1.5 percent of the three best EU performers.