Stavrakis touts vote of confidence from IMF

THE government said yesterday an improved economic forecast from the International Monetary Fund (IMF) was a vote of confidence for the Cypriot economy.

“The most important thing is that the forecast concerning the public finances is much improved,” Finance Minister Charilaos Stavrakis told reporters.

Although forecasting a slower growth rate since its previous estimates in October last year, the IMF also expects drops in the deficit and public debt.

The growth rate for 2011 is marginally down and forecasted at 1.7 per cent from 1.8 per cent in October.

The growth prediction for 2014 is 2.6 per cent, down from 2.9 in October.

For 2011, the April IMF forecasts show a deficit of 4.5 per cent of GDP along with a debt of 63.4 per cent, compared with 5.6 per cent and 64 per cent respectively in October 2010.

The IMF predicts the public deficit to drop to 2.7 per cent by 2014 and the public debt to reach 63.7 per cent.

The deficit in 2014, according to IMF’s October forecasts, stood at 5.3 per cent with the debt soaring to 70.2 per cent.

“I think we are talking about a vote of confidence from the IMF,” Stavrakis said. “It forecasts positive and increasing growth rates, cuts in deficit and stabilisation of public debt to an exceptionally low figure compared with the rest of the eurozone.”

The minister said he was optimistic that “with the proper fiscal policy we will achieve our targets for the year” without additional measures.

Last week the government announced additional cuts of some €60 million in operating costs following lower than expected revenues in the first three months of the year.

The government must urgently deal with the structural problems of the economy, especially the public pensions, which are draining state coffers.

On Friday, the minister said, he would be meeting with unions to present in detail the findings of an actuarial firm hired to look into the pensions system in the central government and wider public sector.

 

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