International Monetary Fund says Cyprus will need more spending cuts to meet bailout targets

The International Monetary Fund says Cyprus will need to make additional spending cuts to meet a key target of its financial rescue program.

IMF official Delia Velculescu said during a teleconference Wednesday that more permanent cuts to government spending, including the public sector wage bill, are needed for authorities to achieve a primary surplus of four percent of gross domestic product by 2018. A primary surplus does not count the cost of servicing existing debt.

She said the IMF is still "flexible" on the specifics, given that there's still time to go before 2018, but the cuts need to be balanced and sustainable.

Velculescu said the country must revise its foreclosure legislation to tackle the high number of bad loans that are holding back economic growth.