Cyprus sees growth of 4 percent

NICOSIA (Reuters) – Cyprus yesterday said it expected to see growth of around 4 percent next year and a small budget deficit, following an unexpected surplus this year. It also forecast a reduction in its public debt levels to around 48 percent from a projected 60 percent in 2007. «These forecasts are based on the cooperation of government, private initiative and the work force which results in a robust economy,» Finance Minister Michalis Sarris told parliament in a budget presentation for 2008. The budget puts next year’s spending at 3.88 billion Cyprus pounds ($9.7 billion), against 3.60 billion budgeted in 2007. Spending covers only the southern areas of Cyprus controlled by its internationally recognized Greek-Cypriot government. Budget implementation was forecast to rise to 85 percent next year from 80 percent in 2007, Sarris said. Sarris said the fiscal deficit was expected to hover at 0.5 percent of GDP next year. The economy is poised to produce a rare surplus of 1.5 percent in 2007, generated mainly by a windfall of tax-related revenue from a booming property market. «A reduction in the surplus, compared to 2007, is largely due to the temporary nature of a strong increase in revenue in 2007,» said Sarris, saying that additional tax relief measures were also expected to ease revenues next year. Inflation, he said, was seen at 2.5 percent on the back of recent increases in crude oil on global markets from a projected 2.0 percent in 2007. Unemployment was expected to ease to 3.9 percent, Sarris said. Together with Malta, Cyprus will join the eurozone on January 1 next year.