Cyprus: Reaching 2012 Deficit Target a Must

Menelaos Hadjicostis - Associated Press

NICOSIA, Cyprus (AP) — Cyprus must stick to its deficit target of 2.5 percent of GDP this year to convince international investors that it can survive the European financial turmoil, the island's new finance minister said Thursday.

Vassos Shiarly said the government is ready to take any additional austerity measures that may be required to meet the target and eliminate "uncertainty" over its commitment to fiscal discipline.

Cyprus, a member of the 17-country eurozone, is relying on a €2.5 billion ($3.29 billion) low-interest loan from Russia to see it through this year. A string of credit rating downgrades — due mainly to its large banking system's exposure to Greek debt — caused its borrowing rates to jump in international markets.

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April 12, 2012