THE GROWTH RATE in Cyprus for the first quarter of 2009 is expected to be the highest and only positive growth rate in Europe this year, Finance Minister Charilaos Stavrakis said yesterday.
The announcement was the latest in a series of conflicting forecasts; just weeks ago the minister had revised 2009 growth down to one per cent.
The International Monetary Fund predicted that Cyprus’ growth rate would only be 0.3 per cent for 2009, the country’s lowest since 1980. However, Stavrakis yesterday said that according to Ministry’s calculations, the first quarter of 2009 Cyprus’ growth rate will be ‘‘quite satisfactory and close to two per cent”.
Asked to comment as to what data he is basing this on, Stavrakis was unable to answer. However, the Statistical Service is expected to disclose the data for the growth rate in May.
The Finance Minister remained confident, despite the fact that all the basic sectors of the economy shrank in the first quarter. Property sales were down by 56 per cent, revenue from tourism dropped 15 per cent, income from VAT was down 3.7 per cent and income tax by 10 per cent.
“The fact that we ensure the highest possible growth rate in adverse conditions confirms that the economic policy that Cyprus is following is correct,” Stavrakis said.
According to the Minister 2010 will be a “difficult year” and assured that the government would be making sure to deal with current financial conditions in order to minimise the cost on the taxpayers and the economy in the years to come.
Stavrakis also said that if the growth rate drops below two per cent “this which will create an increase in unemployment and will cause a large drop in public finances”.
“For this reason we are managing the public finances with a conservative and careful way”, he said
The Minister was speaking after a meeting at the Ministry to brief the private sector on the initialling of the agreement between Cyprus and Russia to avoid double taxation and to discuss the action plan for 2009 for attracting foreign investments.
Stavrakis said that after Russia, “the next goal is Ukraine”, adding that officials have already started contacts and efforts to have the same success as with the Russian federation.
There are also repeated efforts for European countries like Spain, Italy, Germany and Sweden in which similar issues are pending.
Stavrakis added, “We are working on an action plan to be able to resolve these significant differences regarding the avoidance of the double taxation treaty”.
