ECONOMY

In Brief

Cyprus budget swings to deficit of 6.1 pct of GDP Cyprus, the euro area’s second-smallest economy, saw its budget swing to a deficit of 6.1 percent of gross domestic product in 2009 after a 0.9 percent surplus in 2008, the government’s statistical service said. Public expenditure last year rose 5.5 percent and revenue fell 10.2 percent, leaving a deficit of almost 1.03 billion euros ($1.40 billion). Government spending on wages, the biggest expenditure, rose more than 12 percent on an annual basis to 803.5 million euros, according to the statement on the service’s website. Cyprus has a «very serious structural problem» that cannot be solved without the government cutting public spending. Cyprus Central Bank Governor Athanasios Orphanides, who is also a member of the European Central Bank governing council, said on April 12. (Bloomberg) Portugal on track to address rise in shortfall MADRID (AFP) – Portugal is «on the right track» to address a sharp rise in its public deficit, the head of the group of euro finance ministers said yesterday. Luxembourg Prime Minister Jean-Claude Juncker said that Lisbon was «behaving responsibly,» two days after the European Commission issued a sharp warning that Portugal needs to cut its deficit in 2010, with finance chiefs steeling themselves for the possibility of investors switching their target from Greece. The Portuguese government has said it wants to reduce the deficit from 9.4 percent of gross domestic product last year – a rise of 6.6 percentage points from the 2008 figure – to 8.3 percent for 2010. Romanian growth Romania had its economic growth forecast lowered to 0.9 percent this year by ING Groep NV, which cited severe winter weather that caused a lingering recession. Romania’s economy may grow more slowly than the previously forecast 1.9 percent, Bucharest-based ING economists Nicolaie Alexandru-Chidesciuc and Vlad Muscalu wrote in a report e-mailed yesterday. The country’s economy probably shrank 0.4 percent in the first quarter, according to the report. The government, which obtained a 20-billion-euro ($27 billion) bailout from an International Monetary Fund-led group last year, predicted the economy will start growing as early as the first quarter. A more protracted recession may fuel interest-rate cuts, according to ING. (Bloomberg) Deal terminated Ellaktor SA, Greece’s biggest builder, terminated a highway concession contract in Romania after the Romanian government rejected some clauses, blocking financing for the project. Ellaktor, which made the announcement in an Athens bourse filing yesterday, had a 50 percent stake in the company that won the contract through its Aktor unit. (Bloomberg) Hungary at risk Hungary, the first European Union member to obtain a bailout in the 2008 credit crisis, faces the risk of a sell-off in its currency if the Greek fiscal crisis spreads, Lombard Street Research said. Hungary is vulnerable due to its reliance on foreign-currency loans, the level of government debt and an expected increase in the budget-deficit figure as the next government plans to consolidate losses at state-owned companies, Lombard economist Maya Bhandari said in a note to clients. (Bloomberg)