He was commenting on the announcement by the Cyprus statistical service’s (Cystat) estimated 2.8% economic growth rate, both for the fourth quarter of 2016 and the whole year.
The finance minister said it is “up to us to stay the course, to manage responsibly and credibly this second chance we have secured, to avoid repeating past mistakes.
“If we do that, I am convinced the recovery will continue,” he said.
“Growth is not based on circumstantial and misleading policies, through reckless public spending and budget deficits, nor on excessive and unviable bank lending, as has unfortunately been the case in the past. It comes from real reignition of economic activity.”
According to Georgiades, “we need such satisfactory but viable growth rates to make up for the ground lost”.
“We have been through a deep and protracted recession, we are clearly on a course of recovery, and we need to maintain such satisfactory growth rates over the years to come,” he said.
“This is our vision and assessment for 2017, as well.”
Cystat’s estimates, he added, confirms theEuropean Commission’s announcement on Monday.
“It recorded an increase in private consumption, a positive contribution from all productive sectors, a decrease in unemployment on an annual basis from 14.9% at the end of 2015 to 13.3% last year, and a 2.7% increase in employment,” the finance minister said.
On Monday, the European Commission forecast the Cyprus economy to continue growing in 2017 and 2018, although at a pace slower than last year.
It said it expected the growth rate in Cyprus to slow down from 2.8% in 2016 to 2.5% this year and 2.3% in 2018, continuing to be burdened by the high stock of bad loans in Cypriot banks’ balance sheets.
Georgiades added that the fiscal budget for 2016 remains balanced, with a small surplus of €9.1 million corresponding to 0.1% of gross domestic product, even after significant tax cuts were introduced in the year.
“The loss of revenues was more than offset by the increase in revenues from the overall improvement in the real economy and the labour market,” Georgiades explained.
He noted that value-added tax revenues saw a 7% increase, and social insurance contributions expanded by 4.7%, without an increase in the tax rates.
“This is my response to the doubters, in and outside Cyprus,” the finance minister said.
“We have managed to combine healthy economic growth with fiscal viability, and this is the key characteristic of our economic policy.”
In the continued effort for reform and growth, Georgiades said he considered positive parliament’s decision to release funds aimed at attracting investors to develop government property in Troodos, privatise the state lottery, as well as starting the process of privatising the Cyprus Stock Exchange via a specialised study.
“Some time has been lost on these fronts, but every effort will be made to make up for it,” he said, noting that he expects a similar decision for Larnaca port.
“Equally important is the proposal currently before the House for the indefinite freezing of hiring in the public sector and the unfreezing of promotions,” he said.
He also announced that a new government proposal to turn the state telecoms company (Cyta) into a public company through the issue of share capital will be forthcoming soon, “with the assurance that in any case, the majority control of the new company will remain with the state”.
Referring to a similar bill tabled last year, which created a new company to replace Cyta without such assurance and was hastily withdrawn in the face of opposition from parties, Georgiades said that “we hope that this differentiated framework will be viewed positively when it goes to the House”.
Source: Cyprus Mail
