State accused of creative accountancy

THE GOVERNMENT has been borrowing money from profit-making state organisations such as the Human Resources Authority and the Game Fund, to plug gaps in the public debt, the House Finance Committee heard yesterday.

Even though the government’s move is legal, MP warned that this would almost certainly have a negative long-term effect on the state and semi-state organisations that have been affected.

According to StockWatch yesterday, the matter arose during discussions on the Human Resource Development Authority of Cyprus’ (HRDA) budget. A HRDA spokesman confirmed that the authority had lent the government €24 million from its surplus in 2010 and official figures from the Finance Ministry show that the government has increasingly been borrowing money from state funds – besides the Social Security Fund – over the past three years.

As the loan is considered intra-governmental, it is not included in the state’s official debt, showing that the debt has been restricted to €10 billion, when in fact it is in the range of €17.5 billion – or 105 per cent of GDP, deputies heard.

The matter was brought to light by DISY MP Averof Neophytou, who strongly criticised the way the government was handling the state’s finances. His claims were backed by the HRDA spokesman, who hastened to add that the loans were given based on the Investments Law of 1991.

Speaking after the meeting, Committee Chairman, DIKO’s Nicolas Papadopoulos, said he was less than pleased to hear of the government’s new tactics, which he said had never been used before in the history of the Republic.

He added that the government had also borrowed from the Game Fund to show that its deficit had been reduced.

“We can’t use creative accountancy to fool those who are supervising the Cypriot economy,” said Papadopoulos.  This practice, he added, would have a negative long term effect on state organisations.



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