THE CABINET yesterday decided to impose a cap on the spending of ministries and government services as an “additional safety mechanism” to ensure they keep within the 2011 budget, said government spokesman Stefanos Stefanou.
According to Stefanou, Finance Minister Charilaos Stavrakis yesterday briefed the council of ministers on the expenditure for each ministry and service, comparing it to budget forecasts so that relative adjustments could be made where necessary to stay within the budget. The decision was then taken by the cabinet to put a ceiling on all spending.
The spokesman said it was “very natural and responsible” of government, especially in conditions of a financial crisis, to continue monitoring the course of expenditure.
He explained that not all fiscal months are the same citing as an example the first fiscal quarter during which traditionally revenues are low and more expenses are often recorded, whereas revenues rise with the beginning of the tourist period.
“Fortunately, it appears that tourism this year will bring increased revenues,” he added.
Stefanou added that sometimes there also deferred revenues, which the government takes into account.
Regarding press reports of a €500m cut in expenditure, Stefanou refused to be drawn into giving exact figures, saying instead that the 2011 budget forecasts an increase in spending of around four per cent. The government wants to stay within that budget, he added.
House President Yiannakis Omirou yesterday warned the government not to waste any time in tackling the economic crisis, noting that international markets had already started viewing Cyprus with “distrust”.
“There is no luxury for further delays. The government will have to submit a comprehensive plan for the financial consolidation of the Cyprus economy. All political parties are ready for consensus and the responsible handling of the economy’s problems,” he said.
“We are talking about weeks and days. Decisions will have to be taken,” he added.
Asked to comment on the need to take further measures on the economy as highlighted by Omirou and the Central Bank, Stefanou said the government had taken very specific measures and would continue to do so. The president will meet with unions and employer organisations next week, “exactly to decide on further measures regarding the reduction of expenditure of the state machinery”.
He added: “It is within this context that we prepared an actuarial study on the public pension system and wider public sector.”
