Global Biz

Cyprus to cut back 150m euros in public sector

(Xinhua)
Updated: 2010-04-02 02:31

NICOSIA - The Cypriot government decided on Thursday to cut back 150 million euros ($200 million) in operational expenses of the public sector by the end of 2011 in a bid to curb the budget deficit.

"Today we decided further reductions of operational expenses of 150 million euros till 2011," government spokesman Stephanos Stephanou announced following a cabinet meeting.

The cutbacks will only include operational expenses and development projects will not be affected, added the spokesman.

"For 2010, we will cut operational expenses by 60 million euros, and in 2011, by 90 million euros,"he explained.

A record budget deficit of six percent of the island state's GDP was recorded last year, up from a 3.5 percent surplus the previous year. The public debt went up from 48 percent to about 55 percent.

Last month, state officials, including President Demetris Christofias, announced a 10 percent pay cut as a voluntary gesture to contain the deficit.

The Cypriot government is preparing a stability package and President Christofias will discuss with public service union leaders after Easter on further austerity measures.

Cyprus economy deteriorated sharply last year, mainly because of a reduction of tourism revenue by 10 percent and a stagnated estate market.