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Budget 2015 a reliability bet

11/12/2014 07:48
The state budget 2015, to be presented in parliament by the Finance Minister today, is a bet for the government in order to regain the country’s reliability in the international markets.

It hopes to achieve a deficit decline to 1.7% of GDP and a decrease - for the first time in seven years – of the public debt to 103%.

The Cypriot economy is still in a difficult situation, the Minister admitted, but appeared optimistic for a disengagement of public financing from the international creditors.

"The markets are starting to trust us”, he said.

In statements to StockWatch, the Minister said that the budget is based on fairly conservative estimates.

The Ministry estimates that the economy will achieve marginal recovery and growth rate of 0.4% in 2015, from a contraction of 3% this year.

Revenues are expected to drop by €24 million to €5.928 million and expenses to increase by €40 million to €6662 million.

The government’s message is the disengagement of the financing from the international creditors.

"Our goal" he said "is the economy to be back on track much earlier than the end of the financial program because the markets are beginning to trust us. Hopefully they will also be able to lend our needs”, he added.

Reforms will continue

Mr. Georgiades clarified that the consolidation of the public finances, the modernization and the reforms will continue.

"We will continue the effort beyond the program. Until the last year of governance”, he stressed.

The road is long, however. Although public finances have improved and Cyprus returned to a primary surplus, significant risks have accumulated in the financial system due to the volume of problematic loans in the balance sheets of the banks.

As a result of the problems that the banks face with the non-performing loans, the ability to fuel growth in 2015 is limited.

Indicative of the challenges that the government faces is that before his speech on the budget he will have to convince the parties to avoid actions that would postpone the implementation of the foreclosures law passed in September.