Finance Minister Vassos Shiarly said the government will introduce a round of spending cuts aimed at reducing the budget deficit to 3.5 per cent of gross domestic product in 2012 from a previously revised 4.5 per cent. "If we take into account the fact that measures amounting to 1 per cent of GDP are being planned...which I believe will be presented to parliament next month, the deficit will come in at 3.5 per cent", he said.
With the Cypriot economy expected to contract at an annual rate of 1.5 per cent this year, data released recently showed that recession deepened in the second quarter of the year, adding urgency to the country's request in June for international aid to rescue the island's teetering banking sector. Cyprus will need an estimated €13 billion of aid, including some €9 billion for the banks and €4 billion for the government's own financing requirements. The government hopes to reach a deal by the end of September.
The finance minister said he will communicate with a delegation of international inspectors later this month when they are expected to return to the island to assess a bailout programme for the country.
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© Wall Street Journal
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