Our View: Looking on the bright side will not save the economy

WE DO NOT know whether finance minister Charilaos Stavrakis has ever watched the Monty Python film, Life of Brian. We suspect he has because he has made the song that concludes the film his personal philosophy, a philosophy that has shaped his view of the Cyprus economy. Most would know that we are referring to, ‘Always look on the bright side of life’, which is sung by men on crucifixes.
While our economy is not in such a no-hope situation, Stavrakis’ inclination to always look on the bright side, does no favours to his credibility or standing. His insistence on finding a positive spin to put on the grimmest of news about the economy has become a bit of a running joke, but also raises a rather serious question. If the minister does not recognize what is going wrong how would measures be taken to put things right?
This attitude was evident again on Monday when he was speaking about that 2011 budget, just after it had been approved by the Council of Ministers, and once again he looked only on the bright side. State expenditure would increase by only one per cent next year, which was down to ‘unprecedented tightening’ of spending, he said. With state revenue forecast to increase by 4.7 per cent, the government would only need an additional €150 million, in savings or extra revenue, to bring the deficit to 4.5 per cent – the target set by the European Commission for 2011.
This was nowhere near some politicians’ estimates for savings in the region of €500 million, the optimistic minister said. But what guarantee did he have that the increase in state revenue would be as forecasted? This year VAT revenue is lower than in 2009 and it could follow the same trend in 2011. Economic activity has contracted and so has state revenue so why has Stavrakis assumed it would increase by 4.7 per cent? Is this a case of always looking on the bright side life?
DISY deputy leader Averof Neophytou, yesterday reminded us how the government had got its forecast completely wrong the previous two years. For 2009 it forecast a surplus, but the deficit hit 6 per cent of GDP; for this year, it forecast a 4.5 per cent deficit but it would be closer to 7 per cent. The government had got its forecasts completely wrong for the last two years, because it made unjustifiably optimistic assumptions about revenue increase. It has made the same mistake now, because Stavrakis cannot help always looking on the bright side. This might be a good recipe for personal happiness, but it does not work for an ailing economy.

The Cyprus Mail is the only English-language daily newspaper published in Cyprus. It was established in 1945 and today, with its popular and widely-read website, the Cyprus Mail is among the most trusted news sites in Cyprus. The newspaper is not affiliated with any political parties and has always striven to maintain its independence. Over the past 70-plus years, the Cyprus Mail, with a small dedicated team, has covered momentous events in Cyprus’ modern history, chronicling the last gasps of British colonial rule, Cyprus’ truncated independence, the coup and Turkish invasion, and the decades of negotiations to stitch the divided island back together, plus a myriad of scandals, murders, and human interests stories that capture the island and its -people. Observers describe it as politically conservative.