Cyprus to fulfill EMU criteria by end of 2005
By Nicos Bellos
Brussels, Nov 17 (CNA) – Cyprus will fulfill all criteria for accession in the Economic and Monetary Union, scheduled for 1st January 2008, by the end of 2005.
According to the European Commission Economic Forecasts 2005-2007, Cyprus will be virtually ready by the end of the year since the only problem was the public deficit that must be under 3% of the GDP.
According to the report, the public deficit from 4.1 percent of the GDP in 2004 will drop to 2.8% by the end of the year, while by the end of 2007 it will be at 2.6%. The deficit criteria for entering the EMU notes it must be under 3% of the GDP.
The report said that the GDP will increase this year to 3.9% and next year will reach 4.0% while in 2004 it was 3.8%.
Public debt is projected to decline from 72% of GDP in 2004 to below 68% by 2007, reflecting mostly the effects of improved primary balances from 2005.
Inflation for the first nine months of 2005 reached 2.1% compared to the same period in 2004. “This is marginally above the 2004 rate at 1.9% mainly as a result of higher energy prices, but still slightly below projected rise of 2.3% for the year”, the report said, adding that in 2006 and 2007 inflation is expected to gradually weaken again around 2.1% as oil price pressures abate.
As far as unemployment is concerned, with steady GDP is projected to inch down to 4.8% this year, from a peak of 5.1% last year, and to further diminish to 4.5% by 2007.