ECONOMY

In Brief

IMF tells Cyprus to cut bloated payroll NICOSIA (Reuters) – The International Monetary Fund urged Cyprus yesterday to cut a bloated state payroll feeding growing deficits it forecast could spike over the eurozone threshold of 3 percent this year. In a concluding report of an annual consultation, the IMF said it expected Cyprus’s general government deficit to reach 3.9 percent in 2009, with growth at around 0.3 percent. This is a sharp reversal from surpluses of 2007 and 2008, and a considerable divergence from official Finance Ministry forecasts of a 2.0-2.5 percent deficit this year, and 1 percent growth. The state payroll accounted for about a third of Cyprus’s public spending, a trend which would stoke an expansionary debt-deficit cycle if it were not intercepted, the IMF said. The imbalance would not go away by collecting more revenues or raising taxes, said IMF Mission leader Angana Banerji. Cypriot tourism revenues drop 17 percent in May Revenue from tourism in Cyprus dropped 17 percent in May as Europe’s worst recession in six decades pinched traveler spending. Tourist spending fell to 158.1 million euros ($222 million) from 191.3 million euros in the same month a year earlier, according to a statement from the Nicosia-based statistics service on its website yesterday. Travelers spent 70.5 euros per day on average, marking a 7.6 percent drop from last year. Visitors from the UK, the island’s biggest source of tourists, spent an average of 56.9 euros a day, or a 16 percent decline, the service’s table showed. In the period January through May visitor spending fell 12 percent to an estimated 390.4 million euros from 442.3 million euros a year earlier, according to the statement. (Bloomberg) Wind bonds Privately owned Italian telecoms firm Wind announced plans for a 2.7-billion-euro ($3.8 billion) bond by unit Wind Acquisition Finance yesterday, the biggest test yet of European appetite for high-yield bonds. The proceeds of the sale of senior unsecured notes due 2017 will be used to prepay all of the company’s outstanding pay-in-kind loans due on December 21, 2011, and to make up to 500 million euros in cash distributions to its ultimate parent company, Weather Investments SpA. «This will be a good test for high yield. There is a lot of pent-up demand because we have still only seen a couple of deals,» said Neil Murray, head of credit at Scottish Widows. The planned issue would be almost triple the size of the $1 billion bond sold by British cable operator Virgin Media a month ago. (Reuters) Alfa-Beta offer Delhaize Group raised its offer to buy the shares it doesn’t already own in Alfa-Beta Vassilopoulos SA to 34 euros a share, according to an Athens bourse filing. Delhaize Group had previously offered 30.50 euros a share. The new offer, which won’t be revised again, is subject to approval by the Greek securities regulator, according to the filing. (Bloomberg) Romanian banks Romania’s financial sector has so far proven able to absorb the relatively moderate shocks stemming from the global crisis, the central bank said in its annual financial stability report yesterday. «The financial stability indicators point to a low systemic risk in the context of a limited external exposure,» it said in a statement. (Reuters)