Cyprus PIO: News Update in English, 98-08-18

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

News Update

Tuesday, 18/08/98

CONTENTS

• [01] Cyprus condemns Omagh bomb attack
• [02] Corrective policies are needed, IMF tells Cyprus government

[01] Cyprus condemns Omagh bomb attack

"We express deep sympathy to the families of the tragic victims and the hope that the perpetrators of such acts of violence will not succeed in destroying the dreams and hopes of the people of Northern Ireland for peace, security and justice", a statement said.

"We would like to believe and hope that the peace process will not be affected by the bomb attack and that the perpetrators of this atrocious crime will be caught and brought to justice", it added.

The Acting President of the Republic, Mr Spyros Kyprianou, has already sent a message of sympathy to the British Prime Minister and the President of Ireland.

The Foreign Minister, Mr Ioannis Kasoulides, has also sent similar messages to his British and Irish counterparts.

[02] Corrective policies are needed, IMF tells Cyprus government

In a press release at the end of consultations with Cyprus, the IMF urges the government to proceed with corrective policies are now needed to address domestic and external imbalances, especially if the benefits of the planned financial and capital account liberalisation are to be maximised.

It stresses that measures curbing public spending in a bid to reduce the fiscal deficit pointing out that otherwise the fiscal deficit could widen even further in 1998, leading to a sharply higher debt/GDP ratio.

A wider fiscal deficit could also lead to weaker current account prospects and potentially to a loss of investor confidence "during a crucial phase of financial liberalisation", the IMF report notes.

"In the absence of corrective policies, the fiscal deficit could widen even further in 1998, leading to a sharply higher debt/GDP ratio, weaker current account prospects, and potentially a loss of investor confidence during a crucial phase of financial liberalisation", it says.

It also stresses that, while revenues from tourism should improve this year, helping to raise output growth to 4,2 per cent, up from 2,3 per cent in 1997, structural measures are needed to broaden the economic structure and reduce reliance on tourism and banking.

The IMF welcomes the proposed corrective fiscal package recently sent to parliament, which includes a rise in the value-added tax rate, increases in excise taxes and cuts in civil service positions.

The government needs to develop a plan of action to cut spending, relying on administrative measures to the extent necessary, and limiting public wage increases to no more than the cost of living adjustment, it says.

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

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