THE RULING coalition yesterday appeared closer to a deal aimed at reining in the public deficit, following the latest meeting between the president and the leaders of AKEL and DIKO.
“We have taken a big step forward,” AKEL leader Andros Kyprianou told newsmen following the two-hour meeting at the Presidential Palace.
“I am confident that we shall have a positive outcome over the following days,” he added.
As leaked to the press, a proposed government package provided for curtailing the civil service payroll and raising taxes on a number of products, including medicines and foodstuffs.
The measures are aimed at slashing the deficit to achieve the EU goal of 4.5 per cent of GDP by the end of 2011.
But time is running out for an agreement, as the package is to be incorporated into the 2011 budget, which comes up for ratification in parliament next week.
Some of the issues discussed yesterday needed further clarification, Kyprianou added. “But I think these matters can be easily cleared up.”
Economic experts from AKEL and DIKO will likely be meeting with the Finance Minister today to discuss the pending issues.
DIKO chairman Marios Garoyian likewise sounded optimistic a deal was on the cards.
As if reading from a script, he said: “We have taken a significant step forward.”
Calling yesterday’s discussion at the Presidential Palace “a useful exercise”, Garoyian said he hoped the concerned parties “will reach common solutions soon”.
Reports last week spoke of a “chasm” between DIKO’s and the government’s proposed measures to raise revenues and cut state expenditures. The party was said to be looking at a €400 million package, compared to the government’s €240 million.
As Garoyian reiterated yesterday, DIKO is seeking measures that tackle the economy’s long-term problems.
The main bone of contention has revolved around steps to restrain the state payroll. PASYDY, the civil servants blanket union, is hostile to any reduction in wages.
The leaked government package called for an up to two per cent reduction in civil servants’ wage increments – meaning that government employees and officials would still see their salaries increase by four to five per cent regardless.
But the state broadcaster reported last night that the government and the two coalition parties are now shifting to a plan for a real wage freeze (zero increments). The freeze, however, would apply to certain wage brackets while leaving the rest intact.
Meanwhile DIKO deputy Nicholas Papadopoulos warned yesterday against taxation as a quick fix:
“Even if we levy new taxes, and state expenditures continue to grow, next year we will be back to square one, but with more taxes,” he said.
“There are no painless measures, all measures will hurt.”
The cost of the financial crisis should be distributed equally and the private sector should not be made to bear the brunt, Papadopoulos said.
And in a dig at the administration, Papadopoulos said President Christofias had promised no new taxes on taking office.
