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Cyprus finance minister sees return to growth in 2015 - with caveats

Cypriot Finance Minister Harris Georgiades speaks to Reuters in an interview in Nicosia April 22, 2013. REUTERS/Andreas Manolis

NICOSIA (Reuters) - Bailed-out Cyprus expects a return to growth in 2015 after three years of recession, its finance minister said on Thursday, unless there are further external economic headwinds.

"We are close to the exit of a recession. We do remain however restrained and cautious and are closely following some external developments which may affect us," Finance Minister Harris Georgiades told parliament in his annual budget speech.

He did not elaborate on which external developments could affect Cyprus, but said in another section of his speech that economic recovery in Europe was anaemic and that Russia was heading into recession.

Both are key business partners and Cyprus relies heavily on high net worth Russian visitors to bolster its tourism sector, about 10 percent of the island's economy.

Authorities expect Cyprus to return to growth of about 0.5 percent in 2015. It will end a double-dip recession which has been running with a brief period of growth since early 2011. In 2013, Cyprus was forced to take a 10 billion euro(7.8 billion pounds) bailout from the European Union and International Monetary Fund.

A forecast recession of 2.8 percent in 2014 was considerably shallower than initial projections, which exceeded 4.0 percent, Georgiades said, lifted by consumer demand and tourism.

Cyprus is following a three-year austerity programme which includes privatisations. Georgiades said public debt was gradually falling and seen at 103 percent of GDP in 2015, from an estimated 105 percent this year.

(Reporting By Michele Kambas, editing by Jermey Gaunt)