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Tuesday preview: Cyprus in the spotlight

The formal version of the memorandum of understanding (MoU) between Cyprus and its international lenders is expected to be unveiled on Tuesday.

The formal version of the memorandum of understanding (MoU) between Cyprus and its international lenders is expected to be unveiled on Tuesday.

The MoU will say that the country should reach a primary surplus of four per cent of gross domestic product (GDP) in its budget from 2017 onwards to ensure public debt falls, according to Reuters which obtained the document ahead of its official release.

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Cyprus will have a budget deficit before debt servicing costs of €395m or 2.4% of GDP this year, greater than the 1.9% of GDP in 2012, the document will reveal.

The primary deficit will grow to €678m or 4.25%of GDP next year before shrinking to shrink to €344m or 2.1% of GDP in 2015.

The MoU will also list fiscal steps, reforms of public administration, pensions, healthcare, labour market privatisation and services that the Mediterranean island agreed to undertake in exchange for euro zone financial aid.

The document will be discussed by the Eurogroup at its Thursday meeting, along with the likelihood of adjustments to Ireland and Portugal's public debt reduction targets.

Meanwhile, new economic data on the UK's industrial and construction production and trade results will be released. The latest Office of National Statistics estimates on construction output and industrial production may help to dispel fears of a triple-dip recession.

Investors will also be looking to the release of Chinese inflation data for signs of future policy. A high figure will raise the likelihood of more tightening.

The country's trade has recently been affected by news of a bird flu outbreak.

Tuesday April 9th

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