Good chance of a deal on economy package

A CRITICAL meeting took place yesterday, to discuss the measures that need to be taken to improve the economy and to finalise a package that will cut the budget deficit.

The meeting took place between Finance Minister Charilaos Stavrakis and the leaders of co-governing parties AKEL and DIKO. The meeting lasted for two. The two parties will meet again next week to finalise the package after going over the proposals with their own parties.

According to reports AKEL and DIKO do not agree on all measures suggested, but both parties are confident a final agreement can be reached since there is some common ground between the two.

Finance minister Charilaos Stavrakis’ latest proposals for the economy were leaked earlier in the week when they were sent to DIKO and AKEL prior to the meeting. Some of the measures suggested by Stavrakis are a 5.0 per cent tax on bank profits, a 10 per cent increase in the price of cigarettes, a 5.0 per cent increase in VAT on pharmaceuticals, an increase in water tariffs, reducing the number of public servants by 1,000 annually for the next three years and a 1.0 or 2.0 per cent pay cut for Public servants depending on their salary.

Politicians, unions and businesses began the blame game earlier in the week when international ratings agency Standard and Poor’s cut Cyprus’ A+ rating to ‘A with a negative outlook, citing  he banking sector’s high exposure to debt-riddled Greece.

The agency said its action reflected “increased vulnerabilities from embedded credit risk of the Cypriot financial system’s external assets and domestic loan book, and the impact these could ultimately have on public finances”.

The government defended the banking sector, adding that S&P’s comments contained “positive and positive assessments for the Cypriot economy.”

The finance ministry wants to introduce pay cuts in the civil service and increase corporation tax on banks to 15 per cent from the present level of 10 to cut the fiscal shortfall to the EU requirement of 4.5 per cent next year.

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.