Finance Minister describes 2023 budget a responsible one, not a pre-election budget (2)

Minister of Finance Constantinos Petrides said the state budget for 2023 is not deemed as a pre-election one, noting it is a responsible budget.


Presenting the budget at the House Finance and Budgetary Affairs Committee, Petrides said the government did not exploit the budget for pre-election purposes and “therefore it is bombarded on a daily basis with false figures.” The Finance Minister added that it is “a responsible budget” that aims for recovery, has increased development expenditure by 12% and at the same time maintains healthy finances, respecting future generations.


The 2023 budget will be the government’s last budget as Cyprus is headed to presidential elections in February 2023 and a new government will assume office by March next year.


The 2023 state budget, Petrides said, provides the coming government with the tools to face the great challenges. He noted that no cuts were imposed while social expenditure have been increased and cash buffers have been generated.


“This budget includes the largest social expenditure in the history of the Republic of Cyprus, includes the largest development spending in Cyprus’ history as well as expenditure aiming to green growth and digitisation,” he said.


Regarding the Cypriot economy, Petrides said that the rate of growth by the end of 2022 is expected to be 5.7%, surpassing all forecasts. He talked about an economy with resilience and prospect, adding that Cyprus is the only country in the EU that has managed to upgrade its economy. For 2023, he added, the growth rate will drop to 3% with a high degree of uncertainty.


According to the Finance Minister, Cyprus’ public debt is expected to continue its downward path and from the peak of 115% in 2020 will decline to 89.3% of GDP in 2022 which would constitute one of the biggest reductions among the EU member states.


“This is very important for the future, so that more upgrades (of Cyprus credit ratings) will emerge and debt servicing costs would not rise,” he added.


Turning to the fiscal finances, Petrides said the expected surplus of 1.7% of GDP this year should be higher, noting however that the government did not aim at high surpluses to avoid social costs. But he added that this surplus has satisfied capital markets which have upgraded Cyprus credit ratings this year.


The Minister also said that according to European indexes, there is a sharp decrease in inequality on the island and social cohesion indicators, despite everything that is being said by the opposition.


He furthermore, said it would be highly irresponsible to propose tax reform currently with the international uncertainty and inflation. As for raising corporate tax to 15%, he said that it was a condition to be agreed at a European level, something which was not done.


Referring to the fiscal dangers, he talked about a protracted period of high inflation, a risk of problematic loans increasing but also the immigration issue as it might significantly affect the welfare state in the long-term.


Source: Cyprus News Agency