Cyprus parliament passed a cut-down austerity budget for 2012 at a late night session on Friday to reduce public deficit down to European Union (EU) standards.
Finance Minister Kikis Kazamias had sent to parliament a budget along the lines of an EU directive to cut the deficit from its present level of above 6 percent to 3 percent in 2012 and wipe it out by 2014.
However, deputies from opposition parties passed last minute amendments further reducing public spending by an additional 140 million euros (182 million U.S. dollars).
Approval of the budget came after a summary debate that was put off for several hours while deputies worked on the cuts. Parliament recessed after the debate for the New Year’s holiday season.
The government had to rely on opposition parties to approve both the budget and an austerity package passed on Wednesday, after losing its parliamentary majority because of a governing coalition split-up, following a catastrophic munitions blast in July.
International rating agencies had warned Cyprus with further downgrading of the already battered economy if it did not come up with credible measures to consolidate public finances.
Shortly before the budget debate, Fitch warned Cyprus and five other countries — Belgium, Ireland, Italy, Slovenia and Spain — with further downgrading of their economies, citing negative prospects for a solution to the eurozone debt crisis.
Fitch’s present rating of Cyprus stands at BBB with a negative outlook.
Deputies penalized all three major trade unions representing both public and private sector workers by blocking a 3-million-euro (4 million dollars) allowance after they went on strike and organized a Greek-style rally outside parliament on Wednesday that disrupted the debate on the austerity package.