Cyprus, seeking EU aid, commits to fiscal targets

Cyprus said on Monday it was committed to economic reforms and reducing its public deficit to within the European Union limit this year, pledging to shore up its economy after applying for financial aid from Europe's rescue fund.

The Mediterranean island became the fifth euro zone country to apply for a financial lifeline from European Union support funds on June 25 as the debt crisis continued to engulf the currency bloc.

Cyprus's woes stem from the heavy exposure of its oversized banking sector to debt-crippled Greece, leaving some Cypriot banks needing to be recapitalised. Leading credit ratings agencies have downgraded Cyprus to speculative grade territory.

"Cyprus recognises these challenges and is committed to the achievement of fiscal targets and required structural reforms, the securing of necessary funds for the government financial needs, and the effective management of any challenges faced by the banking system," the government said in a statement on the aid application.

"Cyprus remains committed to reducing its general government deficit below 3% by the end of 2012, despite the adverse economic conditions," the statement added.