By Athena Karsera
FINANCE Minister Takis Klerides yesterday urged the House to adopt fiscal reforms to prepare Cyprus for EU accession and bring economic indicators back into line.
During his Budget Speech in the run-up ahead of a three-day debate on the government’s proposals next month, Klerides said progress had been made in 1999, but that key economic indicators were still lagging behind European monetary union guidelines.
With the debate beginning on February 2, Klerides said, “It is my responsibility and obligation to stress that a continuation of high fiscal deficits could negatively affect the economy, standards of living, but also the (EU) accession course.”
He said that the economic situation was “a cause for concern, but it is not irreversible.”
Klerides added that indicators would carry on deviating from desired levels this year due to corrective measures to boost public revenue but that the heart of the economy remained healthy.
“The European course dictates a change of mentality and approach to economic and social issues,” he said, adding that the government was prepared to return 20 per cent of revenue raised from an increase in Value Added Tax (VAT) to those in society that needed it most.
A bill for an increase of VAT from 8 to 10 per cent is pending before the House, as is an increase in vehicle road tax and an abolition of duty exemptions for semi-government organisations.
Klerides also said that priority would be given to the carrying out and completing major construction works, such as sections of the Limassol to Paphos highway and the new Nicosia general hospital.
On predictions for the year, Klerides said that indications for increases in tourism were encouraging and that unemployment was expected to stay at its current level of 3.5 per cent.
The 2000 Budget is the first to be presented as a unified budget, and sets spending at £2,007 billion and net revenue at £1,348 billion.
The redefined 1999 Budget provided for £1,608 billion in spending against £1,088 billion in revenue.
The fiscal balance, which has been in debt since 1995, fell to 5 per cent of the gross domestic product (GPD) in 1999, lower than initially predicted. Public debt, meanwhile, rose to 61.3 per cent of GPD in 1999.
