Reducing unemployment and tax burdens the priorities for 2018, Cyprus FinMin says

Following three years of continuous economic growth, Cyprus in 2018 aims to reduce unemployment to single digits and to promote further steps towards tax burdens Minister of Finance Harris Georgiades told the Parliament on Friday.

One of the main targets for next year is to reduce unemployment to single digits and to reach full employment by 2020, Georgiades said speaking before the plenary, marking the commencement of the debate for the 2018 state budget.

He said the 2018 state budget features a fiscal surplus, providing for public expenditure of Euros 7.5 billion and projected revenue of Euros 7.7 billion.

This is a budget with no deficits but with fiscal space. A budget that will enable us to continue reducing taxes, to promote projects and policies that foster growth and employment, providing a tangible social dividend to our fellow citizens, he stressed.

He said 2017 marks the third consecutive year of consecutive economic expansion in Cyprus, following the recession that commenced in 2009. Hit by a severe banking crisis and a consecutive recession since the second half of 2011 and after losing access to international markets Cyprus in 2012 requested financial assistance from the EU and the IMF. Cyprus exited its bailout in March 2016.

Georgiades said GDP growth reached 2% in 2015, accelerated to 3% in 2016 and is expected to reach 4% in 2017, whereas the economic growth is estimated to exceed 3% in the next three years.

The protracted and deep recession which began in 2009 and lasted until 2014 leading to to a spiralling unemployment is behind us for good, he said.

In his address, Georgiades recalled that the government wiped out the fiscal deficit in the first year of the adjustment programme by slashing public spending by 10%.

And this wasn’t easy. But we made it once. It wasn’t necessary to return with new taxes and spending cuts that would undermine the already shattered confidence even more, he said.

He referred to yesterday’ announcement over a 2.6% budget surplus for the first ten months of 2017, noting we achieve our targets not with taxes and financial burdens but though economic recovery.

Georgiades also said the prudent fiscal management created fiscal space for the promotion of 16 policy measures of tax breaks and tax incentives, such as the annulment of the temporary tax on salaries that was introduced in 2011, the annulment of immovable property tax, and the promotion of tax breaks on all new capital invested in Cypriot corporations.

Our aim in 2018 is to make the next steps towards further tax breaks, he said.

Furthermore, the Cypriot Finance Minister pointed out that public debt has been rendered sustainable and absolutely manageable, declining below the threshold of 100% of GDP, two years earlier than the initial projections, while the government began early repayments of IMF loans and debt to the Central Bank of Cyprus, while 2018 will mark the repayment of the Euros 2.5 billion loan with the Russian Federation, secured in 2012.

He also recalled the repeated upgrades by rating agencies, the return to the capital markets, noting that the yields of Cypriot bonds declined to 1.5% which is a historic low.

In this way a vicious circle of recession and deficit has turned to a virtuous circle of stabilisation, recovery and growth, he went on to say.

Source: Cyprus News Agency