Fis­cal deficit be­low 3% in 2014, says FinMin

Financial Mirror (Cyprus) - - FRONT PAGE -

The is­land’s fis­cal deficit is ex­pected to drop be­low 3% in this year, which is the EU re­quire­ment and to range close to 2.5%, while the fore­cast by the Troika of in­ter­na­tional lenders is 4.7% and the IMF 4.4%, Min­is­ter of Fi­nance Har­ris Ge­or­giades said on Fri­day.

Pre­sent­ing the state bud­get for 2015 be­fore the par­lia­men­tary Com­mit­tee on Bud­getary and Fi­nan­cial Af­fairs, Ge­or­giades said that pub­lic debt will drop be­low 100% of GDP be­fore 2017.

He also said that pub­lic debt will climb to 105% in 2014 and it will de­cline to 103% in 2015.

“We ex­pect that pub­lic debt will de­cline be­low 100% of GDP, while out­put will reg­is­ter a third con­tin­u­ous year of growth by then,” he said.

Ge­or­giades said Euro­stat’s GDP re­vi­sion has as­sisted in re­duc­ing the pub­lic debt, adding that un­der the Fi­nance Min­istry’s ba­sic sce­nario, the pub­lic debt is deemed sus­tain­able and down­ward trend.

He noted that es­pe­cially if the stress test re­sults, to be an­nounced on Oc­to­ber 26, show no cap­i­tal short­fall for the Cypriot banks or needs be­low the pro­gramme’s EUR 1 bln buf­fer, there will be no in­crease in the is­land’s pub­lic debt and the down­ward trend will con­tinue.

At the same time, he noted that the min­istry ex­pects a pri­mary bal­ance sur­plus of 0.5% in 2014 as a re­sult of which the ex­ces­sive deficit will be cor­rected two years be­fore the ECOFIN’s rec­om­men­da­tion.

Ge­or­giades fur­ther said that “2014 was a year of sta­bil­i­sa­tion both for banks and pub­lic fi­nances”, adding that it was also a year of restor­ing mar­ket trust to the econ­omy of Cyprus.

He ex­pressed the point of view that “2015 will be a year of re­cov­ery”.

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Re­fer­ring to the bud­get for 2015 and the medium-term fi­nan­cial frame­work for 2015 – 2017 he told MPs that the goal is to help the path of cor­rec­tion of the econ­omy rather than to un­der­mine it.

“We are pre­sent­ing a bud­get for 2015 which just as for 2014 will ab­so­lutely achieve all fis­cal tar­gets, will not cre­ate a new pri­mary deficit, with no new taxes, no new bur­den placed on the pri­vate sec­tor, house­holds and busi­nesses and which in­cludes no new cuts and fore­sees a slight rea­son­able ex­pen­di­ture growth of 0.6% in line with the ex­pected growth of the econ­omy”, he pointed out.

At the same time he noted that the gov­ern­ment re­mains re­served as re­gards its plans

Ge­or­giades said that pub­lic debt is con­sid­ered to be vi­able and to drop be­low 100% of GDP be­fore 2020.

He also told MPs that un­em­ploy­ment is ex­pected to be 14.8% in 2015.

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