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FinMin claims pressure to revert to the old ways

Finance Minister Harris Georgiades in an interview with Politis, says that he sees the economy improving in every respect.

“The banking system has stabilised and has to a large extent recovered, we kept our taxation system stable and we are now in a position to go ahead with tax benefits,” he explains. A sense of trust and credibility has been created, and a satisfying recovery of the economy has been recorded.

Future steps, he said should be based on the actual strength and ability of Cyprus’ economy.

Despite this, Georgiades claims, since Cyprus exited the memorandum, to be under incredible pressure from political parties, unions and other organisations to open up the coffers, to return back to the old days.

“As Finance Minister, I am under constant pressure to increase state funding, but I will never tire saying that if we revert back to the old ways, our economy will once again be in danger of collapsing. Returning to the old ways will undermine the stability and development, resulting Cyprus becoming unattractive to foreign investors.”

“We should bear in mind, if we have learnt anything from what we have been through, that decision, attitudes and choices that defy logic will get us into trouble. We cannot expect to take a loan from a bank without considering how to repay the loan, or as a state to borrow over and above our ability to repay the loan,” said Georgiades.

Georgiades pointed out that the banking system has had a total reform as has the states social policy, while now efforts are being directed at the total reform of the public sector.

Georgiades said that some smaller semi-government organisations have been closed, while some services, especially in the tax department, have been amalgamated. Unified working hours in the public sector has also boosted productivity. All these changes have contributed into creating a sustainable and productive public sector, but there are still many changes that need to be made, the most important being the regulation of the state payroll.

With regards to the budget for 2017, Georgiades described it as “balanced” saying that the budget would stay within the government’s means and if there is a deficit it would be only marginal and shows adequate primary surplus.

The Minister is satisfied with the foreign investment in Cyprus and has noted a marked increase saying that Cyprus has managed to turn around the negative picture that it presented a few years ago.

“We must retain our competitiveness and attraction as an investment destination through reforms and continuous economic stability and this is another motive to continue the serious collective effort we have undertaken in recent years,” said Georgiades.

According to Georgiades, a solution to the Cyprus problem and the reunification of the island will create “huge potential” for the Cyprus economy provided we meet three basic requirements regarding budgets, banking and environment for investment and entrepreneurship.

“First, financial management rules of public finances should be implimnted, as defined by the European economic governance framework. Secondly, we must beware of the banking system, which -as we know very well is a necessary ingredient for the proper functioning and development of an economy. The banking system in the entire territory, i.e. what currently operates in the occupied area, should work on terms and conditions consistent with that of the European Banking Association. Finally, after the solution there is a need to create a friendly and favourable economic environment for investment and entrepreneurship. The infrastructure of the unified state either through its bureaucracy or through its size or through an onerous tax burden that weighs down on  economic activity will hinder the possibility of a united economy to exploit the huge potential, which will undoubtedly arise through a Cyprus settlement.”

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