Economy to grow up to 2%
NICOSIA — Cyprus' economy will grow between 1.5 percent and 2 percent this year with favorable prospects for a continued upturn in 2012, an International Monetary Fund official predicted Tuesday.
But Wes McGrew, the IMF's European Department deputy division chief, said the outlook is subject to unusually high risks from other European financial markets, where the debt crisis has been creating turbulence.
McGrew urged Cyprus' government to move "forcefully" in enacting reforms aimed at reducing the fiscal deficit and public debt ratios — especially curbing the large public sector payroll — in order to preserve investor confidence.
"You really need to get ahead of the market...you know that investors are focused on this, so the sooner you move the better and there's risks to waiting," McGrew told a news conference to present the preliminary findings of an IMF economic policy review.
Cyprus, a euro member, introduced a €175 million ($236.4 million) cost cutting and tax hike package in this year's state budget to fulfill a promise to European Union to halve a 6 percent deficit by 2012.
The Finance ministry estimates the deficit for 2010 was 4.9 percent of GDP and projects a slight drop to 4 percent this year.
With around 53,000 government workers in the country of 800,000, the Cyprus government pledged to tackle the state wage bill — representing around 30 percent of all government spending — by trimming 3,000 government jobs by 2012.
The EU has a 3 percent deficit limit, though the rule has been broadly broken after countries' public debt was bloated by the financial crisis.
Finance Minister Charilaos Stavrakis has said that public debt, estimated at 60.6 percent for 2010, is projected to rise marginally to 61.5 percent this year and stabilize at around 60 percent by 2013.
McGrew said Cyprus' financial sector — which has grown to 2.5 times the island's gross domestic product in the past decade — remains robust thanks to conservative lending practices and vigilant supervision, despite its exposure to bailed-out Greece.
"Broadly, we feel that the risks are manageable in the banking sector," he said.
The IMF report comes as credit ratings agencies Moody's Investor Service and Fitch Ratings are reviewing Cyprus' finances for a possible downgrade amid concerns over the island's public finances and exposure to bailed-out Greece.
Ratings agency Standard and Poor's downgraded Cyprus from A plus to A with a negative outlook last November, mainly pointing to banks' exposure to Greece.
Cyprus' economy grew by 0.9 percent last year after a 1.7 contraction in 2009.
http://www.cyprusweekly.com.cy/main/92, ... 7108-.aspx
DT starts pimping a few TC girls in Ledra st and what do you get… 
