ECONOMY

In Brief

Borrowing costs rise for Portugal ahead of vote LISBON (AFP) – Portugal, under pressure as one of the weaker eurozone states, had to pay investors much higher rates of return to raise new funds yesterday as an austerity budget goes to a vote in parliament. A cross-party pact is expected to ensure safe passage for the highly unpopular budget, and thus avert the resignation of the prime minister and renewed strains in the eurozone. The Portuguese debt agency said it sold 500 million euros ($700 million) in 3-month bills but had to pay buyers a return of 1.818 percent, up sharply from the 1.595 percent paid at a similar sale on October 6. For the one-year debt, the agency sold 531 million euros but the rate of return jumped to 3.260 percent from the 2.886 percent paid on October 20. Portugal was expected later yesterday to vote on a tough austerity budget for 2011 aimed at restoring its strained public finances to health through a series of drastic spending cuts and tax rises. The budget is expected to pass after Socialist Prime Minister Jose Socrates, who heads a minority government, reached a deal with the opposition. IMF calls on Albania to cut deficit and debt The International Monetary Fund urged Albania to reduce its budget deficit to 2.5 percent of gross domestic product next year and cut state debt to reduce risks to its economic recovery. The Adriatic nation’s economy will grow 3 percent this year and 3.5 percent next year «underpinned by booming exports and a strong performance in the agricultural sector,» the IMF said in an e-mailed statement today. Inflation is within target, confidence in the banking system has been restored and credit is expanding, the IMF said. «Debt reduction is thus the key policy priority to mitigate the risk of macroeconomic instability,» the IMF said. Albania’s «high public debt constitutes the major risk.» This rose to about 60 percent of GDP now, from some 54 percent of GDP few years ago, the IMF said. Albania’s government plans to halve the budget deficit to 3.7 percent of GDP in 2010, after a 7.4 percent of GDP ratio last year, according to the IMF. (Bloomberg) Energy routes Azerbaijan is mulling various natural gas export routes as it waits for European countries to decide on investment in the Nabucco pipeline to tap Caspian resources, according to its deputy foreign minister. Azerbaijan was expected to be the first supplier to Nabucco, planned to ship Caspian gas more than 3,300 kilometers (2,050 miles) from Turkey to Austria to cut Europe’s dependence on Russia. The OMV AG-led project has been bogged down over financing, pricing and politics. The venture is vying with smaller projects such as the Interconnector Turkey-Greece-Italy, or ITGI, led by Edison SpA and Greek natural gas company DEPA, and the Trans Adriatic Pipeline AG, or TAP, led by Statoil ASA and Elektrizitats-Gesellschaft Laufenburg AG. «We would welcome Nabucco once Nabucco countries are ready to invest in building the pipeline,» Araz Azimov, Azerbaijan’s deputy foreign minister, said in an interview in Brussels. «We also have other options, like ITGI, like TAP and the relatively new project AGRI, which stands for Azerbaijan, Georgia, Romania and is based on the idea of supplies of liquefied natural gas.» (Bloomberg) Cyprus visitors Cyprus’s tourism industry may lose up to 34,000 visitors when ailing state-owned Eurocypria Airlines ceases operations on November 13, the president of the Association of Cyprus Travel Agents said. German tour operators have sold about half of the 34,000 holiday packages from November to March and «losing these tourists will be a catastrophe,» Victor Mantovani, president of ACTA, told Bloomberg News by telephone yesterday. The association is pushing the government to find «alternative ways» for the flights to operate, he said. The European Union will examine a government plan to merge Eurocypria and Cyprus Airways tomorrow. Cyprus’s government acquired Eurocypria from Cyprus Air in 2006 for 22.9 million euros ($32.1 million) as part of a rescue plan. (Bloomberg)