ECONOMY

Cyprus sees surplus target challenges

NICOSIA (Reuters) – Cyprus faces mounting difficulties in meeting its 2008 budget surplus target as a crippling drought saps state finances and a global downturn weighs, its finance minister said yesterday. The island republic has taken drastic steps to counter a crippling water shortage and will take its first deliveries in shipping tankers from Greece at the end of June. But the mounting cost of the crisis is likely to eat into the 0.5 percent budget surplus forecast earlier this year. «I am not saying a budget surplus is impossible, but it is more challenging,» Finance Minister Charilaos Stavrakis told Reuters. «The global economic downturn will unavoidably affect Cyprus to some extent, in combination with the effects of the drought. The direct costs of importing the water, plus the infrastructure we need for it, is 40 million euros,» he said. Cyprus’s reservoirs are virtually empty and its two desalination plants are already running at full capacity. An estimated 8.0 million cubic meters of water will be transferred from Greece between June and November. The island had forecast a budget surplus of 0.5 percent of GDP this year, following a 3.3 percent windfall in 2007.