THE GOVERNMENT is trying to do the impossible in a bid to continue with its development projects and increased social benefits with reduced revenues, the Finance Minister Charilaos Stavrakis said yesterday.
“We tried to square the circle,” Stavrakis told parliament’s finance committee. “With reduced revenue to continue the development projects and the increased social benefits, without a skyrocketing public deficit and laxity in public finances.”
The budget deficit for 2010 is expected to reach 4.5 per cent, something that would put Cyprus under EU supervision.
The government is trying to keep the deficit under three per cent to avoid that.
The island expects to spend €7.85 billion next year on revenue of €5.37 billion.
It needs increase its revenue by some €289 million to reach that goal.
Stavrakis repeated that that money could come from stamping out tax evasion and building amnesty.
The tax bill broadens the authority of the internal revenue department, increases the obligations of companies and people, and closes loopholes.
The building amnesty legislation legalises certain structures that would allow their owners apply for title deeds and bring the state cash for issuing them.
Regarding the possibility of Cyprus going under EU supervision, Stavrakis said at the moment only three countries – Finland, Luxembourg and Cyprus – were outside.
But even if Cyprus did go into supervision what was important was to agree an exit program with the European Commission, Stavrakis said.
He added that it was not the same going into supervision with a deficit of 12 per cent like Lithuania or 10 per cent like Greece and a deficit at the lowest possible level of 3.5 per cent.
It is important to maintain the high reliability of the Cypriot economy since its is based on foreign savings and investment, the minister said.
Cyprus lagged behind its euro zone peers and saw its economy tip into a recession in the second quarter of 2009, months after other countries.
State earnings have been sapped particularly by a slowdown in construction.
The island expects 0.5 per cent growth in 2010.
