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