ECONOMY

In Brief

Pay hike for minimum wages may fuel inflation Cyprus’s decision to raise the minimum wage for unskilled labor will spark pay demands and fuel consumer prices in the euro area’s second-smallest economy, business groups said. The minimum monthly salary for workers, such as shop assistants, increased yesterday by 5.6 percent to 835 euros ($1,129) at hiring and to 887 euros after six months of employment, Labor Minister Sotiroula Charalambous told reporters March 29. «Since the amount is already close to wage levels in some collective agreements, this decision may spark chain reactions for wage hikes,» Michalis Pilikos, director of the Cyprus Federation of Employers and Industrialists (FEI), said yesterday in a telephone interview in Nicosia. The move will increase job losses among those who are already the worst affected by unemployment and will lead to price rises of everyday items such as food, the Cyprus Chamber of Commerce and Industry, which represents more than 8,000 businesses, said yesterday in an e-mailed statement. (Bloomberg) Bulgarian deficit bulges on falling revenues SOFIA (Reuters) – Bulgaria’s budget deficit ballooned to 1.4 billion levs ($966 million) by the end of February due to falling revenues and increased spending on pensions and EU-backed projects, the Finance Ministry said yesterday. The deficit almost tripled from a gap of 499 million levs in January, as prolonged recession hit the European Union’s poorest member. The total for the first two months of the year is roughly equivalent to 2 percent of gross domestic product, based on the government’s latest forecast for 2010 GDP. On Wednesday, the government decided to cut salaries, freeze pensions and sell state assets and bonds to keep the fiscal deficit below 2 percent of GDP this year and avoid pressure on its lev currency, which is pegged to the euro. The center-right government pledged to keep a tight fiscal policy and said the austerity plan aimed to fill a potential gap of 1.6 billion levs this year. Serbia-IMF The International Monetary Fund said its executive board had completed a review of Serbia’s economic program, allowing for the immediate release of a 360-million-euro ($486 million) tranche of the country’s bailout loan. The full installment brings the total disbursement of funds under Serbia’s 3-billion-euro standby loan to about 1.3 billion euros, though «authorities have indicated that they will draw only 50 percent of the purchase available under this review,» the Washington-based lender said in a statement dated yesterday. Serbia is going through its first recession since 1999, when NATO bombing, aimed at forcing the country’s troops to withdraw from Kosovo, destroyed most of its infrastructure. With investment drying up because of the global financial crisis and tax revenues falling, the government turned to the IMF for a bailout loan. Government spending, especially statements from some parties in the ruling coalition about pension increases, added tension to talks with an IMF mission in Belgrade last month. (Bloomberg)