NICOSIA, Sept 14 (AFP) - The Cypriot cabinet on Tuesday approved an austere budget aimed at getting the island nation into the eurozone by 2007.
The 2005 budget provides for 3.54 billion Cyprus pounds (6.12 billion euros, 7.51 billion dollars) in spending with a shortfall of 827 million pounds (1.43 billion euros, 1.75 billion dollars).
Finance Minister Makis Keravnos said the budget was a "stabilising" one geared to curbing public spending and "achieving convergence targets".
He said the budget still retained a "social character" as money was made available to build roads, schools and hospitals.
Parliament will now have to endorse the spending programme.
Keravnos said the budget would help contain the fiscal deficit to 2.9 percent of GDP, slightly below the three percent ceiling of the eurozone criteria laid out in the Maastricht Treaty. The 2003 deficit topped 7 percent.
Nicosia said it is meeting other economic targets such as keeping inflation under three percent and pushing economic growth back up to near four percent in 2004.
The budget includes a freeze on new public sector jobs and pay until 2007. Public sector salaries make up 60 percent of state expenditure.
Other austerity measures proposed include increasing retirement age in the civil service from 60 to 63 and raising the general pensionable age from 63 to 65.
Without these measures, fiscal deficit would reach 8.9 percent by 2007, according to official estimates.
Nicosia says failure to achieve these fiscal targets would automatically delay Cyprus' application to enter the Exchange Rate Mechanism (ERM2) and postpone adoption of the euro for an unknown period of time.
The divided island of Cyprus, represented by its internationally recognized Greek Cypriot side, joined the EU on May 1.