Gov’t committed to ‘prudent’ fiscal discipline

Finance Minister Harris Georgiades told his counterparts during a Eurogroup meeting in Brussels on 2017 draft budgetary plans, that the country remains committed on a prudent fiscal stance.

During the discussion on the Cyprus budget, Georgiades explained that deficit and debt trajectories remain within the Stability Pact rules and additional measures might be needed only if a Commission forecast on the structural side is realised.

He added that: “For 2017, the European Commission’s assessment of Cyprus notes a marginal deficit of only 0.4% of GDP, which is, for yet another year, among the top performers in the Eurozone. The debt criterium is being met and no additional measures are needed. Additional measures will be needed, only if a European Commission forecast of potential deviations is realised and this is yet another reason to continue our efforts for sustainable growth and maintain fiscal discipline.”

Meanwhile, the budget debate in the House of Representatives got underway on Monday and Tuesday, with opposition party leaders and MPs using the podium to vent their frustration at the government.

As expected, the Cyprus problem dominated the budget debate, with speeches suspended on Wednesday due to the National Council meeting at the Presidential Palace, and will resume on Thursday, with a vote on Friday.

Meanwhile, an unholy alliance of the ruling and two opposition parties, could secure a safe passage of the budget, which has been described as shy of ‘balanced’, as civil service payroll expenditure has been increased, sacrificing a spending for development.

Joining the ruling DISY will probably be the centre-right DIKO and Solidarity’s three MPs, for a total of 30 in the 56seat House.

The 2017 budget provides for total expenditure of just over EUR 7 bln and revenue slightly below that, generating a fiscal deficit of around 0.6% of GDP.

After growing 1.7% last year, the economy is expected to grow by just under 3% this year and the next.