Cyprus to stick to economic adjustment program until 2018

Cyprus' finance minister Harris Georgiades said on Friday that the eastern Mediterranean island would stick to an economic adjustment program until 2018, dismissing a Greek-style standoff with international lenders.

But Georgiades said this did not amount to strictly following an austerity program.

"I would rather say that this is a responsible financial planning within the limits of the economy and not an austerity policy," Georgiades said.

He confirmed that government planning provided for an increase of public spending by 1.65 percent by 2018.

"This is not a negligible percentage given the fact that GDP is expected to grow by as much then," Georgiades said.

Cyprus was pulled back from the brink of bankruptcy with a 10-billion-euro (11 billion U.S. dollars) financial assistance package by the Eurogroup and the International Monetary Fund in March, 2003, after being shut out of international markets since 2011.

Georgiades said he was confident Cyprus would successfully complete the memorandum it signed with international creditors in ten months.

He said people still suffering from the impact of austerity measures provided for by the bailout memorandum would feel the results of economic recovery only by sticking to the economic reform program.

"Prosperity will not return through empty promises and slogans," Georgiades said, alluding to the policy of the Greek government.

A fiscal policy strategic framework for 2016 to 2018 posted on the finance ministry's website revised this year's expected growth downwards to 0.2 percent from a previous 0.4 percent estimate.

However, this will be the first growth after four years of economic decline.

The economy's contraction in 2014 was 2.3 percent, much lower than the original projection of over 4.0 percent.

The document also lowered the 2016 growth projection from 1.6 percent to 1.4 percent and projected unemployment to drop to 15.1 percent from a 16.1-percent estimate for this year. Current unemployment dropped to 15.5 percent in May thanks to a good tourist season.

The government aims at a primary fiscal surplus of 1.5 percent of economic output this year and 2.5 percent in 2016, after it generated a primary surplus of 2.6 percent in 2014, the finance ministry said.

The fiscal data, better than initially forecast, resulted primarily from higher revenue and secondarily from lower government expenditure than initially budgeted.