Cyprus approves expansion of EU bailout fund

(NICOSIA) - The Cypriot parliament overwhelmingly ratified on Thursday a proposed expansion of the eurozone's 440-billion-euro ($599 billion) bailout fund, the European Financial Stability Facility.

Adoption of the bill, which increases Cyprus' guarantee to the EFSF to 2.02 billion euros from 863 million euros, was approved across party lines.

Only the lone Green MP in the 56-member House of Representatives abstained, and there were no votes against the measure.

The European Union set up the fund last year as a bulwark in the eurozone's debt defences.

Cyprus is on an austerity drive of its own to avoid having to apply to the EU's support mechanism for a bailout after all the international credit agencies downgraded it over its exposure to Greek debt and the government's own fiscal slippage.

Under draft state budget proposals for 2012, the government seeks to reduce the fiscal deficit next year to 2.3 percent of gross domestic product from an expected 6-6.5 percent in 2011.

Economic growth is expected to be flat in 2011 following the aftershock of naval base blast in July, while the economy is expected to rebound by about 1.5 percent next year.

The draft budget will be submitted to parliament on October 10.