ECONOMY

In Brief

Spain cuts civil servants’ pay to reduce deficit MADRID(AP) – Spain will cut civil servants’ salaries this year as part of a deficit reduction plan to ease worries the country will slide into a debt crisis like that of Greece, the prime minister said yesterday. Jose Luis Rodriguez Zapatero told parliament the average 5 percent reduction starting in June is part of a cost-cutting plan, first announced Sunday, that also includes a suspension of automatic increases in retirement pensions, a drop in overseas aid and a reduction in government investment. The goal, he said, «is to contribute, with our financial stability, to the financial stability of the eurozone.» «We are going to ask everyone for a stronger effort. First, from Spanish society but also from the government,» he said. Zapatero fleshed out the details of the plan announced Sunday for deeper spending cuts to reduce Spain’s deficit from 11.2 percent of GDP last year to 9.3 percent in 2010, and eventually to 3 percent in 2013. Argentina extends restructuring deadline Argentina extended a deadline in its restructuring of about $20 billion in defaulted debt and Economy Minister Amado Boudou said Greece’s financial crisis may cause his country to shelve plans to sell bonds. Argentina said it is lengthening the period for institutional investors to tender defaulted bonds from yesterday until tomorrow at 5 p.m. New York time, the government said in an e-mailed statement distributed by Barclays Capital, which is coordinating the offer. The government said it may further extend the period. Boudou said yesterday that the country may delay selling as much as $1 billion in bonds – its first international sale since defaulting on $95 billion in 2001 – after its debt yields soared last week on concern the Greek crisis would reduce demand for riskier assets. (Bloomberg) Recession in Cyprus Cyprus remained in recession in the first quarter of 2010, flash statistics department figures showed yesterday, but there were signs of a rebound in services and tourism. The Mediterranean island’s economy contracted 0.2 percent in the first three months of 2010, compared to a negative 0.4 percent in the fourth quarter of 2009. A flash estimate yesterday showed that for the year, real gross domestic product fell 2.4 percent in the first quarter of 2010 compared to a fall of 3.1 percent in the final three months of 2009. «The contraction of the economy during the first quarter of 2010 is mainly attributed to the negative growth rates observed in construction, trade and manufacturing activities,» the statistics department said in a statement. Positive growth rates observed in the broad services sector and a better performance by the island’s tourism sector buffered the extent of this contraction. «It shows that the quarter-on-quarter growth rate contraction is smaller, confirming a trend which began in Q2 of 2009,» said Michalis Florentiades, head of economic research at Hellenic Bank. «Despite the fact that we are still in a recession and this is the sixth quarter of quarter-on-quarter contraction, there is some hope the economy will stabilize, mainly from positive foreign environment.» Tourism accounts for almost 11 percent of Cyprus’s GDP. (Reuters) Bulgarian decline Bulgaria’s economic decline slowed to 4.0 percent on an annual basis in the first quarter of 2010 from 5.9 percent in the previous quarter, data showed yesterday. A flash estimate from the statistics office showed the Balkan country’s consumption-based economy remained in recession in the first quarter, as did neighboring Romania, while export-reliant Central European peers showed signs of recovery. Despite the economic contraction, consumer prices rose 1.8 percent in April year-on-year, mainly due to a hike in the prices of cigarettes and fuels. On a monthly basis, consumer prices were up 1.1 percent. (Reuters) New euro member Tiny Estonia won the European Union’s backing yesterday to adopt the euro, overcoming a deep recession to meet the strict requirements and underlining the currency club’s allure to small countries – despite Europe’s crisis over government debt. (AP)