FINANCE Minister Kikis Kazamias yesterday warned that more austerity measures would be put in place if necessary and urged the opposition to approve the 2012 budget because the losers at the end of the day would be the country and its people.
Kazamias said the budget, submitted to parliament on Thursday, was quite conservative in contrast to the two previous years.
“It is an honest budget associated with reality,” the minister said, adding that confrontation over the economy would not earn anyone any political profit.
The opposition – who has the majority in parliament — has already criticised the budget while rejecting it could cause problems for President Demetris Christofias whom they want gone, holding him responsible for the July 11 blast that killed 13 men.
“If the budget does not pass … those who reject it cannot expect any political profit,” Kazamias said. “They only sure thing is that the losers would be the country and all Cypriots.”
The minister said rejection of the budget or significant provisions like the hike in VAT from 15 to 17 per cent would bring Cyprus closer to the European support mechanism.
The deficit for 2012 is expected to reach 2.8 per cent of GDP.
Rejection of the VAT rise would raise the deficit to 3.8 per cent.
“So we must all raise our sleeves and work seriously,” he said.
The minister said the government “will prepare further belt-tightening proposals if necessary” including cuts in the state payroll. “If needed we will ask for it.”
Fighting of detractors, the minister said this administration was now dealing with distortions created in past decades.
One such are tax-free allowances handed to state officials.
“I am totally against the policy adopted in the last 15 years. My effort is to convince that these things have to change because they are provocative,” Kazamias said.
The minister said civil servants cannot be targeted over benefits given to them by successive administrations in the past 50 years.
And he was bothered by harsh criticism against the government that recent public sector cuts were not enough when the DISY administration, between 1993 and 2003, increased salaries and benefits by 50.5 per cent in three years.
“Everyone must contribute in changing these distortions,” Kazamias said.
Beyond the bloated state payroll, the continuous increase of handing out allowances indiscriminately for the past 15 years was also a “thorn” for the economy.
Kazamias said this will change and “no one will receive a cheque if they do not apply” and to apply they need to show their tax declaration “even if they claim they do not have any taxable income.”
He said checks will be carried out and those caught misleading the state will be held to account.
“We need to be realistic. Someone had to touch upon this issue at some point,” the minister said.
On Wednesday, the IMF said Cyprus needed to take urgent action to consolidate its finances through the implementation of credible structural measures with immediate impact.
