MAIN opposition DISY yesterday expressed its readiness to work with all political powers to put in place measures that will contain public spending.
It is the only way “to rescue our economy, which has been led to the brink of disaster by the government and (ruling) AKEL,” a DISY statement said.
The party said Friday’s announcement by ratings agency Standard and Poor’s is the final warning regarding the course and the prospects of the Cypriot economy.
S&P said it may cut the sovereign credit rating for Cyprus, citing its belief the government’s fiscal position is no longer sustainable.
“We believe the fiscal position of the Cypriot government is no longer sustainable,” S&P, which cut Cyprus’ rating last month, said in a statement. “Due to the departure of the junior coalition party, DIKO, the Cypriot government is, in our opinion, in a weaker position to pass emergency budgetary measures through parliament.”
DISY said after S&P’s clear position, the government should realise that its option to propose an increase in taxation instead of cutting spending “does not convince anyone, neither domestically nor abroad.”
The island’s biggest party said an increase in taxation will hurt growth and unemployment without resolving any of the serious problems of the economy.
DISY has suggested that one of the measures to shore up state finances should be extending the retirement age to 65.
But AKEL’s youth, EDON, said yesterday that such a measure would ultimately hurt young people.
“These neo-liberal approaches worsen class antagonism and create a host of other social problems with the main one being the increase of unemployment among the youth,” EDON said.
The organisation said such positions would not be accepted and warned those “who think they can mess around with the future of the new generation that they will be faced with the rage and opposition of Cypriot society as a whole.”
Cyprus has had its credit ratings cut by all three major rating companies in the past three weeks, with S&P lowering it to BBB+ from A- on July 29. Fitch downgraded the island to BBB from A- four days ago, citing concerns that Cyprus will have difficulty raising funds.
That followed a downgrade last month by Moody’s.
On Friday, S&P said that while it expected the government to introduce a budget and economic package on August 25, it is “uncertain as to the extent and efficacy of these measures.”
The agency particularly questioned whether the government can meet next year’s “ambitious” deficit target of 2.5 per cent “without more extensive expenditure cuts including to public-sector payrolls.”
