NICOSIA - Nicosia conceded Thursday the economy would slip deeper into recession than first projected while the fiscal deficit will fall outside its 3% of GDP target.
For the first time the government has come clean over an economic slide it is failing to keep in check.
“Our estimation based on today’s facts, without taking further measures, is that the deficit will hover at around 4.5%,” government spokesman Stefanos Stefanou said.
Before Nicosia applied for financial aid in June it pledged to get its deficit down to below the EU-stipulated 3%. It will now overshoot this.
Stefanou said the government’s prediction of a marginal 0.5% contraction in GDP has also been revised upwards to 1.5% for 2012.
He said the government was preparing another package of austerity measures that would “increase revenue and reduce spending” but did not elaborate.
In the first six months the government cut spending by 1.37% but this was lower than the projected 3%.
“This was due to the high cost of borrowing and other factors.” Cyprus is in talks with the Troika to negotiate the terms of a bailout.
Nicosia seeks to avert harsh measures EU offi cials want to impose in exchange for financial assistance to bailout its beleaguered banks and economy.
“The Troika has its opinion on where to make cuts and to increase revenue and we have our views and positions.”