Cyprus should reach a primary surplus of four percent of GDP in its budget from 2017 onwards to ensure public debt falls, a memorandum of understanding between Nicosia and international lenders on a 10 billion euro bailout said.
The document lists fiscal steps, as well as reforms of public administration, pensions, healthcare, labor market privatization and services that the Mediterranean island agreed to undertake in exchange for euro zone financial aid.
According to the memorandum of understanding (MoU), obtained by Reuters, Cyprus will have a budget deficit before debt servicing costs of 395 million euros or 2.4 percent of GDP this year, a bigger gap than the 1.9 percent of GDP in 2012.
Next year the primary deficit will grow to 678 million euros or 4.25 percent of GDP and then shrink to 344 million or 2.1 percent of GDP in 2015.
In 2016, the island is to reach a primary surplus of 204 million euros or 1.2 percent of GDP and 4 percent from 2017 onwards.
(Reporting By Jan Strupczewski; Editing by Adrian Croft)