Cyprus PIO: News Update in English, 00-10-13

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From: The Republic of Cyprus Press and Information Office Server at <http://www.pio.gov.cy/>

CONTENTS

• [01] Finance Minister presents 2001 Budget to House of Representatives

[01] Finance Minister presents 2001 Budget to House of Representatives

Presenting the budget in the House of Representatives, Mr Klerides pointed out that the prospects for the Cyprus economy next year are encouraging, although a lot will depend on oil fluctuations.

For the year 2001, Mr Klerides predicted a 4.5% growth of the real GDP, fuelled by a booming services sector. He said the unemployment rate is projected to average 3.3%, while the fiscal deficit is expected to fall to around 3.3% of the GDP.

The budget provides for 2.11 billion Cyprus pounds of public expenditure and 1.56 billion pounds of income, compared to an expenditure of 1.84 billion and an income of 1.44 billion for the year 2000 (one Cyprus pound is trading at 1.52 US dollars).

Referring to economic developments this year, Mr Klerides said that despite the prolonged drought and the increase in the price of fuel, there have been high rates of development, full employment, and increases in incomes.

This year the growth rate has reached of 4.8 %, with domestic demand, private consumption and investments expanding considerably. Unemployment has dropped by 0.3% to rest at 3.3%.

The tertiary sector is expected to show a growth of 6.7% while the manufacturing sector is showing recovery with a 3% expansion due to the lower exchange rate of the Cyprus pound in relation to the dollar and the pound sterling and partly due to technological progress and restructuring.

Mr Klerides said that although inflation is rather high, currently at 4.2%, it is expected to decline. The inflation rise was attributed to high fuel prices, the prolonged drought and higher exchange rates of the sterling and the dollar.

He noted that the current account deficit had widened from 2.5% to 3.7% of the GDP mainly due to higher imports. Public debt also rose to 63.7% of the GDP but this was expected to decline by the end of the year.

Mr Klerides said that among the government's top priorities is to lower the fiscal deficit to 2% by 2002 and to decrease the public debt. He also underlined the need for economic reforms and the abolition of public monopolies.

The House of Representatives is expected to discuss the budget before the end of the year.

From the Republic of Cyprus Press and Information Office (PIO) Server at http://www.pio.gov.cy/

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