NICOSIA: The Cyprus parliament has approved the island’s first post-bailout budget providing deep spending cuts in 2014 of about 10 percent to ensure international bailout targets are met.
The late Thursday majority vote — 30 for, 20 against and four abstentions — came after a two-day debate.
Around ¤626m has been shaved off the budget compared to 2013.
Net expenditure, minus interest payments, will reach ¤5.59bn next year compared with 6.22 billion provided for in the 2013 budget.
In return for a ¤10bn bailout ($13bn), international creditors demanded the winding up of the country’s second largest bank Laiki and a “haircut” on deposits above ¤100,000 in its largest lender, Bank of Cyprus.
The unprecedented eurozone “haircut” on deposits forced the government to close all the island’s banks for nearly two weeks in March and impose draconian controls when they reopened.
Ruling Disy called the bailout adjustment programme a “one-way street”, and said positive results were beginning to show, with the economy not shrinking as fast as first feared.= International lenders expect the economy to contract at around 7.7 percent from an initial estimate of 8.7 percent.
Opposition Akel, which voted against the budget, said governments austerity policies were not creating jobs but making more people poorer as benefits and pensions are slashed.
afp
