Cypriot finances in good shape despite Greek exposure, EU says

Feb 22, 2012, 16:23 GMT

Brussels - Half-a-year after it was posited as the European Union's next bailout victim, Cyprus remains on track to whittle down its deficit to 2.7 per cent, the bloc's executive said Wednesday in the run-up to the island's turn at the rotating EU presidency.

The wide-ranging exposure of its banking system to Greek debt had been at the center of speculation about the island's fate last summer, along with the economic repercussions of an explosion at a munitions depot that had knocked out the island's main power station.

But European Commission President Jose Manuel Barroso said Wednesday that Cyprus is 'on target' to meet EU budget recommendations.

'The Cypriot authorities have taken important steps over the last year in terms of fiscal consolidation,' he told reporters after a meeting with Cypriot President Demetris Christofias in Brussels.

The two leaders discussed the priorities of the Cypriot EU presidency, which will take over from Denmark on July 1. Christofias said there had been a 'convergence of views.'

His country's EU presidency has generated some controversy, with Turkey threatening to break off relations with the EU during that time.

The two sides have been at odds since 1974, when Turkish troops occupied northern parts of the island following a coup by right-wing Cypriot army officers backed by Greece. It has been divided into two separate territories ever since.

Barroso encouraged Cyprus and Turkey to improve their relationship.

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