Insider Economy Finance Minister: new budget rejection to push Cyprus to default

Finance Minister: new budget rejection to push Cyprus to default

A new rejection of the 2021 state budget could lead Cyprus to default on its payments, Minister of Finance Costantinos Petrides warned on Friday, stressing that without fiscal support to businesses and self-employed to face the difficulties due to the Covid-19 pandemic “we could be mourning on scorched earth.”

Petrides who briefed he parliamentary committee of Finance and Budgetary Affairs on the revised state budget said a new rejection “surely will lead Cyprus into adventures.”

“We will not be able to borrow from the markets, as we were planning to do in the coming period, we will not be able to support businesses and our investment grade will be threatened,” he said in statements to the press following the meeting.

Petrides told MPs that Cyprus needs to refinance maturing debt which amounts to some billions pointing out that a problem will arise in case Cyprus loses its market access.

“If we don’t have the capacity to borrow, we may end up defaulting. We secured liquidity in March and April (of 2020) but this liquidity should be replenished,” he said.

“Apart from the fact that we will not able to provide money (to support the economy) we may be mourning on scorched earth as we are in the eleventh month of the pandemic and the resilience of the private economy has reached its lowest point,” he stressed.

For the first time in Cyprus’ history, the state budget was rejected in December 2020 by parliament and the state is operating as the parliament with a resolution authorised the funds necessary for January while it has the statutory authority to authorise funds for an additional month.

Presenting the revised budget, Petrides said the government incorporated 26 of the 37 amendments the parties approved on the initial bill, while the revised budget provides for increased expenditure amounting to €339.9 million, of which €220 million are associated with the pandemic.

He also said the government incorporated to the revised budget bill policies issues such as public consultation concerning minimum wage, retirement at 63 for some professional groups without a 12% penalty after an actuarial study to secure sustainability of the Social Insurance Fund and the support of mortgage borrowers who are not deemed eligible for support by the ESTIA scheme.

The vote on the revised budget is scheduled for next Thursday, January 21.

(CNA)

Top Stories

Protest outside CyBC over ‘El Diablo’ – this year’s Eurovision song entry

Protesters on Saturday gathered outside the Cyprus Broadcasting Corporation (CyBC) in Nicosia demanding that El Diablo - the ‘diabolical’ song chosen to represent Cyprus...

Hundreds gather in Sydney in solidarity with Myanmar protesters

Several hundred people gathered in Sydney on Saturday to protest against last month's military coup in Myanmar and urged the Australian government to take...

Start work on vaccination certificates, EU head tells tourism-reliant states like Cyprus

EU governments must immediately begin technical work to ensure a COVID-19 vaccination certificate system can be introduced across the 27-member bloc in time for...

Police issue 216 fines in 24 hours for breach of covid measures

Police booked  213 citizens and three establishment owners all across Cyprus over the past 24 hours for breach of measures aiming to curb the...

Coronavirus pandemic makes Cyprus youth even more anxious over future

Youth in Cyprus are anxious over their future with the coronavirus pandemic intensifying fears of a new economic crisis, according to latest data released...

Taste

Squash soup

Ingredients: 1 kg pumpkin, cut into small cubes, approximately 5 cups 2 medium (400g) sweet potatoes, cut into cubes, approximately 2 ½ cups 1 chopped leek, only...

Mezedes

No visit to Cyprus is complete without enjoying the traditional meal of many small dishes known as ‘meze’. This large feast, which has been a...

Prawns with fried cheese, barley shaped pasta

Put the barley shaped pasta into a small pan with salted water, bring to a boil and when tender, drain. Peal the prawns leaving...

Salmon and shrimp sheftalies

Mix all ingredients for tabbouli in a bowl and keep to one side so flavours can combine. Prepare the sheftalies: wash and soak the casing...