Sarris presents last budget before Eurozone accession

Cyprus fulfills all criteria for accession to the Eurozone as of 1st January 2008, Finance Minister Michael Sarris said. Speaking at the budget debate at the House of Representatives, Sarris said that the current situation of the Cyprus economy is one of robustness and of an intense dynamism, while the basic macroeconomic figures present a constant and steady improvement, reflecting the course of convergence with the economy of the European Union.
The government’s economic policy, said the Minister, has secured steady high growth rates estimated at around 3.7%, resulting with a control of unemployment and maintaining inflation at low levels.

For 2007 GDP is expected to grow by 3.9%, while unemployment will be maintained flat at 2006 levels. Expectations for productivity indicate a growth of 2.7% YoY, with the resulting containment of labour cost per unit at 2.4%, which is considered important for improving competitiveness. Inflation is expected to stand at 2.5% and the fiscal deficit to further improve to 1.6% of GDP.

Sarris said that Cyprus’ budget deficit could fall to 1.5 percent of the gross domestic product this year, almost half a percentage point better than earlier forecasts.
”Recent economic data suggests that fiscal achievements may be even better (than forecast) and the deficit could further lower to around 1.5 of the gross domestic product,” he said.
The deficit is expected to settle at 1.6 percent of GDP next year, Sarris said.
Parliament is expected to vote on the budget next week. It applies only to the government controlled areas of Cyprus.
The island hopes to adopt the euro as its currency on January 1, 2008 and is pursuing an austerity programme to keep its deficit below 3.0 percent of GDP and reel in its public debt, now exceeding 60 percent of GDP but on a declining trend.