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Cyprus Rushes Adoption Of Austerity Measures

Three other euro countries have received international help with their debts ⿿ Greece, Ireland and Portugal. Separately, Spain has also been given a ⿬100 billion loan facility to strengthen its banking sector.

Cypriot lawmakers will vote on the initial round of austerity measures once debate on the 2013 budget wraps up at the end of next week.

The 30-page accord â¿¿ leaked almost immediately Friday after Shiarly said that the troika had authorized its release to party leaders and lawmakers for study â¿¿ shows that the Cyprus government needs to achieve a primary surplus of 4 percent of gross domestic product by the end of 2016.

To achieve that, authorities need to cut spending and raise revenue by a total 7.25 percent of GDP and needs to start doing so right away by making ⿬42 million in cuts by the end of this year.

Spending cuts primarily target the bloated public sector which absorbs a sizeable chunk of all government spending. According to the bailout terms, government workers making over ⿬4,000 monthly will see their salary rolled back by 12.5 percent, while allowances will be cut by 15 percent. Government workers will also pay more into their pensions which will be taxed.

Government handouts such as a mothers and students allowance will also get the chop.

State officials will also see some long-standing perks disappear, including the right to travel first or business class, as well as duty free cars.

A salary freeze will stay in place over the next for years, while inflation-indexed pay rises that the government previously doled out twice-yearly will be suspended until 2016.

The government workforce will shrink by 5,000 through such measures such as hiring one person for every four retirees.

On the revenue-raising side, property taxes will increase as well as a bank levy on deposits from 0.095 percent to 0.11 percent. Tobacco, beer and spirits will also see hefty tax hikes, as will motor fuel. The general sales tax will jump from 17 to 19 percent.

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