Cyprus OK’s Post-Bailout Budget

NICOSIA – Cyprus’ Parliament has approved the 2014 state budget, the country’s first after agreeing to a painful rescue deal earlier this year that saved it from bankruptcy.

The budget incorporates deep spending cuts to meet strict fiscal targets set by Cyprus’ euro area partners and the International Monetary Fund following a government promise to avoid new taxes. The budget passed by a 30-20 vote with four abstentions.

Cyprus in March agreed to a 10 billion euro ($13.67 billion) bailout from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) but that came with harsh conditions, including the confiscation of 47.5 percent of bank accounts over 100,000 euros ($137,000) and ongoing capital controls.

The government said the danger of meltdown has receded, but a tough year still lies ahead with the economy projected to contract by 4.8 percent of Gross Domestic Product (GDP.) Unemployment will peak above 19 percent, analysts said.

(Material from the Associated Press was used in this report)