Cab­i­net ap­proves ‘bal­anced’ bud­get, dev spend­ing up 5%

Financial Mirror (Cyprus) - - FRONT PAGE -

The Cab­i­net has ap­proved the 2016 bud­get, which Fi­nance Min­is­ter Haris Ge­or­giades de­scribed as ‘bal­anced’ and in­cluded a 5% in­crease in de­vel­op­ment spend­ing.

How­ever, not­ing that the ef­fort to main­tain a rea­son­able man­age­ment of fis­cal fi­nances must con­tinue, the Min­is­ter said that the bud­get deficit has been ‘con­tained’ and that there would be no need for new mea­sures or new taxes.

Ge­or­giades said there is in­stead an in­crease in pri­mary gov­ern­ment ex­pen­di­ture and steps are be­ing taken to­wards a grad­ual de­crease of tax bur­dens which does not im­ply a re­lax­ation of the ef­fort for pru­dent fis­cal man­age­ment.

The bud­get pro­vides for a 1.3% in­crease in rev­enue to over EUR 5.9 bln and a 0.3% re­duc­tion of ex­pen­di­ture ex­clud­ing loan re­pay­ments to be­low EUR 6.1 bln. The 5% in­crease in de­vel­op­ment ex­pen­di­ture will off­set a 16% drop in in­ter­est pay­ments.

The gov­ern­ment also re­vised its ex­pected 2015 rev­enue and ex­pen­di­ture to be­low EUR 5.9 bln and be­low 6.7 bln, re­spec­tively.

“We es­ti­mate that growth rate in 2015 will be quite sat­is­fac­tory, al­low­ing us to leave re­ces­sion def­i­nitely be­hind us and we shall sup­port this re­cov­ery and growth course also in 2016,” the Min­is­ter added.

Ge­or­giades was quoted as say­ing that there is no room for re­lax­ation of the gov­ern­ment’s ef­fort and con­sis­tency even af­ter Cyprus com­pletes its eco­nomic and fi­nan­cial re­form pro­gramme in March, which was the con­di­tion for a ?10 bln bailout from in­ter­na­tional lenders.

The gov­ern­ment aims at bal­anced bud­gets “by align­ing public fi­nances with the course of the real econ­omy,” he said. “With re­spect to taxes, we have pre­sented in­cen­tives, most of which have been ap­proved last sum­mer which en­cour­age in­vest­ment in our coun­try.”

In or­der to fur­ther con­sol­i­dat­ing growth and make it sus­tain­able, the gov­ern­ment will put for­ward fur­ther re­forms aim­ing at re­duc­ing un­em­ploy­ment and the “high level of non-per­form­ing loans” and restor­ing in “a fi­nal way” Cyprus’s sov­er­eign rat­ing, which will make re­sort­ing to a new bailout un­nec­es­sary, he said.

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