By George Psyllides
FINANCE MINISTER Takis Klerides yesterday said the economy’s performance was outstanding but the greatest achievement was the anticipated successful completion of the EU accession negotiations.
Speaking before plenum, where he presented the state budget for 2003, Klerides said the government expected to spend £3,080,900,000 while the income would reach £2,401,400,000.
The deficit is expected to reach £679,500,000 compared to last year’s £660, 300,000.
Klerides said that based on forecasts made by international organisations, the island’s external environment for 2003 would be favourable compared to last year. He added the uncertainty and the knock on effects of the measures against terrorism after September 11 were expected to weaken with positive effects on the economy.
Klerides said that if the external environment improves as forecasted, growth rates are expected to rise to 4.3 per cent and unemployment to fluctuate around 3.2 per cent of the financially active population.
The rate of inflation will hover around 4.1 per cent and would be contained at two per cent if the effects of the increases in VAT and consumer taxes were taken away, Klerides said.
Public deficit is expected to decrease further, down to 2.1 per cent of the GDP, compared to 2.7 per cent for 2002.
“The substantial decrease of the public deficit in the last four years to levels lower than those stipulated by the Mastricht Treaty is a very positive development,” the minister said.
Klerides said that despite the adverse conditions in 2002, the economy continued to grow with a positive rate estimated at 2.3 per cent.
The minister said that the International Monetary Fund has recently downgraded its forecast concerning the EU growth rate for 2002, from 1.6 per cent to 1.1 per cent and from 2.9 per cent to 2.3 per cent for 2003.
“The 2003 budget is permeated by the general philosophy and the strategic targets defined by the government’s economic and social policy,” Klerides said.
The targets included in the two programmes were based on three pillars: “Growth, Competitiveness and Reform,” the minister added.
Klerides gave emphasis to the recent tax reforms and its positive effects on the economy and social welfare and stressed that the significant increase of tax-free income to £10,000, the reduction of income tax rates and the readjustment of corporate tax to 10 per cent for both local and offshore businesses was expected to boost the economy and enhance the role of Cyprus as an attractive international business centre.
He said the government’s policy aimed at maximising prosperity for the people through EU accession and expressed his confidence that Cypriots would fulfil their vision of freedom, prosperity and security.
