ECONOMY

In Brief

Trichet: Cyprus must meet fiscal deficit target NICOSIA (Reuters) – Cyprus has no option but to meet its deficit-cutting target, European Central Bank President Jean-Claude Trichet said yesterday, as the island’s government and central bank remain at loggerheads over the extent of its fiscal problem. In an interview with state broadcaster CyBC aired yesterday, Trichet said Cyprus, like other European Union countries, must cut expenditure in a bid to consolidate its economic recovery. Asked whether he was confident that Cyprus would meet its budget targets he said: «It is not a question of being confident or not, it’s a must. I’m sure the government and parliament are fully aware of that.» Brussels began an excessive deficit procedure earlier this year, requiring Cyprus to cut its gap from an official 2010 estimate of around 6.0 percent to 5.4 percent next year. Cyprus’s central bank governor, Athanasios Orphanides, said on Monday the estimates were overly optimistic and warned the deficit could spiral to 7 percent of gross domestic product in 2011 rather than fall. EU probes state aid for United Textiles BRUSSELS (Reuters) – European Union competition authorities said on Wednesday they had opened an in-depth inquiry into Greek state help for textile producer United Textiles and its lending banks. The European Commission said it was concerned that the company had received aid repeatedly since 2007, which might be in breach of EU rules. «Governments are entitled to help firms in difficulty provided that they respect the EU’s state aid rules. These rules ensure that competition is not unduly distorted,» said EU Competition Commissioner Joaquin Almunia in a statement. United Textiles is one of the largest textile companies in Greece and has been in difficulty at least since 2004, the statement said, adding that repeated state help might have given an inappropriate benefit to the company’s lenders. Bulgaria targets Bulgaria is likely to miss its green energy targets due to unrealistic forecasts for power production from hydropower plants and biomass, an industry report showed yesterday. The European Union member has pledged to boost the share of renewable energy to 11 percent of total energy consumption in 2011 and to 16 percent by 2020 and sent to Brussels an action plan outlining how it will hit green power goals. «Bulgaria is definitely not going to meet its 2011 target and, unless it boosts wind and solar power capacity, it would miss its 2020 target too,» Momchil Merkulov of the Association of Producers of Ecological Energy told Reuters. Sofia sees power production from hydro assets in the Balkan country rising to 3.95 gigawatt hours in 2020 from 3.26 GWh this year but the association argued climate forecasts for decreasing rainfall over the next 10 years make the estimate unrealistic. (Reuters) Romania debt Romania plans to sell 4.6 billion lei ($1.5 billion) in local currency bills and bonds in November against 3.1 billion sold this month but analysts expect it to miss the target again if it sticks to a yield cap. Buyers have been demanding higher yields since May due to uncertainty over the coalition government’s fiscal tightening drive and concerns of a higher outlook for inflation. The ministry has refused almost all bids at above 7 percent. «It all depends on what strategy they adopt,» said Ionut Dumitru, chief economist at Raiffeisen Bank in Bucharest. «They probably won’t be able to sell the planned amount if the 7 percent cap stays.» This strategy has so far led to smaller issuance and some failed tenders. Most of the paper the ministry has sold since then carries six-month to one-year maturities. It has sold roughly 30.5 billion lei so far this year. (Reuters) Albania Eurobond Albania issued its debut Eurobond yesterday, raising 300 million euros at a yield of 7.625 percent, slightly wider than initial guidance. The 2015 bond carries a coupon of 7.5 percent and has a reoffer price of 99.496 euros, the lead managers said. (Reuters)