ECONOMY

In Brief

IMF: Cyprus stimulus measures need to expire WASHINGTON (Reuters) – Cyprus should let economic stimulus measures expire once recovery sets in and curb its deficit, the International Monetary Fund said yesterday. In a statement following its regular consultation with Cyprus, the IMF said the budget deficit would need to come down by 0.5 to 0.75 percent of gross domestic product a year, with a significant upfront correction to avoid unfavorable debt-deficit dynamics. The IMF estimated the budget deficit would hit 3.9 percent of GDP in 2009 after posting surpluses in 2007 and 2008. «Fiscal adjustment should rely on reducing public consumption, particularly the wage bill, and on broader public administration reforms,» the IMF said in a statement. The Fund said Cyprus had been relatively shielded from the global financial crisis so far, thanks in part to its adoption of the euro currency, conservative financial sector practices, and solid domestic demand. Turkey and Qatar hold talks on energy deal Qatar and Turkey are discussing a draft memorandum of understanding for energy cooperation that might include a liquefied natural gas supply agreement, Turkey’s charge d’affaires in Qatar said. «We will be proposing a draft MOU to the Qatari side which might also include an LNG deal,» Erdem Tuncer said in a telephone interview from the Qatari capital of Doha yesterday. «We would like to have a long-term, broad-based relationship in the field of energy.» Turkey will discuss buying 4 billion cubic meters of liquefied natural gas from Qatar, Milliyet newspaper said yesterday, citing Energy Minister Taner Yildiz. Qatar is seeking markets for its LNG as it aims to nearly double production of the fuel to 77 million tons a year by the end of 2010. (Bloomberg) Bulgarian recession Bulgaria’s recession deepened last quarter as investment dried up and industrial output fell. The economy shrank 4.8 percent from a year ago after a 3.5 percent decline in the first quarter, the Sofia-based statistics institute said in a preliminary statement yesterday. The median estimate of seven economists in a Bloomberg survey was for a 5 percent slump. The European Union’s poorest member, with a per capita gross domestic product that’s 37 percent of the bloc’s average, has fallen into its first recession in 12 years after a three-year lending boom stalled and foreign investment dried up. «The economy is hit mostly by the drastic drop in investment,» said Latchezar Bogdanov, a managing partner at Industry Watch LLC in Sofia. «The economy is adjusting to the new situation. Industry is falling at a slower pace, which shows that we might see some recovery by year-end.» (Bloomberg) Spreads may narrow The difference in yields, or spreads, between so-called peripheral European government bonds and benchmark German securities may resume their narrowing trend, according to ING Groep NV. «The momentum in spreads of the past month seemed to be strong and a resumption of the tightening is warranted should a widening of another 10 basis points in 10-year peripheral spreads occur,» Wilson Chin, a fixed-income strategist at ING in Amsterdam, wrote. (Bloomberg)