Just-in-time economics

E DII TO RII A L

Budget planning in Cyprus has become an art form. In previous administrations, ‘cooking the books’ to show a healthy government machine and to justify the exorbitant public service payroll prior to elections, had been the norm.

Now, the Troika of international lenders, having imposed their austerity measures, have washed their hands of the creative accounting taking place in the Treasury.

For once, opposition parties are right to worry that the incumbent government is rushing to sell off public land in order to fill state coffers (not that they would do otherwise, if they were elected to office).

The Interior Minister, tasked for nearly five years with introducing public sector reforms, tried to be reassuring in parliament, telling deputies that the piece of legislation proposed by the Cabinet was not for the sale of land, but “to maximise earning from state assets, to help with development, productivity and flexibility in utilising state land.”

However, AKEL MP Eleni Mavrou, herself a former Interior Minister and knowledgeable of the goings on in that department, said that in all, 37 properties are up for grabs, for a total of 2.5 mln sq. metres, including the Berengaria Estate in Limassol and “prime properties” in Pissouri, Yeroskipou, the Secretariat plot in Nicosia and the Cyprus State Fair in Engomi.

This is

a

case

of

faux

pas

by

the

current administration that failed to privatise state-owned Cyta and the EAC when it should have done, and is now searching for revenues to finance the generous wage increases that have been promised to civil servants. Why it could not sell the cursed land opposite the Hilton in Nicosia is anyone’s guess.

The government seems to have convinced the Troika and the rating agencies that the economy is on track for growth, with figures upward of the 3% mark. But that is nothing more than cosmetic figures based on a natural contraction of the government machine after hundreds of civil servants took generous early retirement packages, while pay increases were frozen, temporarily. The ‘real economy’ is still struggling, with the exception of a handful of cases that seem to be doing well.

Tourism arrivals are up, yet revenues are static, the services sector claims to be booming, yet company registrations are at a standstill, with the agriculture sector now showing promising signs of real growth.

Unless jobs are created and unemployment reduced, it is hard to believe that there will be growth, with households and SMEs paying down their nonperforming loans which, in turn, are a drag on the banking sector.

Until then, we will continue to see patch-up efforts by the current and next administration to fill potholes.