Insider Economy Cyprus should boost competitiveness and safeguard surpluses, Fiscal Council says

Cyprus should boost competitiveness and safeguard surpluses, Fiscal Council says

Cyprus needs to implement reforms, boost competitiveness and maintain fiscal surpluses, President of the Fiscal Council Demetris Georgiades said on Thursday pointing out that external risks such as trade wars and a change in the favourable monetary policy could adversely affect the Cypriot economy.

“Cyprus is a small, open but indebted economy and a sharp deceleration of the world economy or a change of the European Central Bank’s monetary policy which would lead to significant increase in financing costs for households and companies and in the longer term of the sovereign, would have huge consequences,” Georgiades told a press conference for the presentation of the council’s spring report.

As he remarked, “the response to these risks is reform, reform, reform.”

He highlighted the need to create a rational mechanism that would limit public wagebill increase to the nominal GDP growth, further strengthening of the NPL framework especially as a large part of the NPLs has been assume by the state (following the sale of the CCB) as well the setting up of a binding mechanism that would channel the state’s cash reserves to public debt reduction.

“We are seeing a trend for increased claims and concessions, fiscal surpluses should be safeguarded. It would be appropriate to create a mechanism that would earmark these surpluses for public debt servicing,” Georgiades added, noting such mechanism would lower debt servicing costs.

He also highlighted the need to boost the economy’s competitiveness, an issue raised by many international organisations and surveys.

“The economy may be going well, we may have good results from tourism, real estate and other measures taken in the public and private sectors, but we are not in position to swiftly respond in a new crisis,” he said.

Responding to question, Georgideas said the Cyprus Investment Scheme should change but he did not imply that it should be terminated.

“A termination of the programme would create problems but it is left to grow and continues it would create problems to other sectors when a crisis hit the construction sector,” he added, noting the scheme could not go on for ever as the Cypriot land cannot absorb more high risers while the programme has caused reaction from the EU and other countries.

Georgiades also highlighted that the scheme has caused increases in plot prices, increase in construction costs and rent in the areas involved and especially Limassol.

“We point out the risks and is up to the politicians to weigh these issues and take the decisions,” he said.

Top Stories

Latest on the spread of the coronavirus around the world

Last update 01/04/2020 01:09 The U.S. government raced to build hundreds of makeshift hospitals to ease the strain on overwhelmed healthcare systems as the United...

Cloudy with sunny spells and local showers

Today will be cloudy with sunny spells with isolated showers or thunderstorms expected. Temperatures will reach 22 C inland and on the coast and 12...

Trump urges Florida to welcome cruise ship with deadly coronavirus outbreak

U.S. President Donald Trump on Tuesday urged Florida officials to open an Atlantic Coast port to a Dutch cruise ship stuck at sea with...

Forest Park says quarantined guests going home

Scores of people in quarantine have already left the Forest Park Hotel in good health and more will follow in the next few days,...

Man arrested for attempted murder

A 52 year old man is under arrest for attempted murder and is due to appear in court later today to be remanded in...

Taste

Village olive pie

Mix the yeast with the lukewarm water and put it aside for about 12-15 minutes to settle.  Sift the flour with the salt into...

Skordalia (Garlic paste)

Rinse the potatoes and place, unpeeled, in a saucepan. Cover with water, add salt and allow to simmer for 20-30 minutes until soft. Drain,...

Village salad

A must-have with every meal is a village salad. You will find it in every tavern or greek restaurant you visit in Cyprus. Make...

Courgettes with eggs

Heat the oil in a frying pan and fry the courgettes at a medium heat until they soften. Add salt and add the eggs....