Just-in-time eco­nomics

E DII TO RII A L

Financial Mirror (Cyprus) - - FRONT PAGE -

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.

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