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Spending down 11% in 2014

29/05/2013 06:05
Finance Minister, Haris Georgiades is now proposing a two-digit spending cut to the Council of Ministers, in the most ambitious budget of the past decades.

The general framework of the budget is submitted today to the Council of Ministers, which is expected to give the baton to the Ministries to identify the necessary cuts.

"It provides for a spending cut of 11%," the Minister told StockWatch.

It is the first budget prepared under the supervision of the troika.

"It will be tight and will reflect the requirements arising through the loan agreement”, Mr. Georgiades said.

The Ministers’ bet is to reduce costs without large reductions in payroll.

The history is against the Minister since despite the efforts and promises for reductions in expenditure, it increased in the previous years.

Even in 2012, after several consolidation measures and wage cuts, expenditure amounted to €8.3 billion and was slightly higher than those of 2011.

Revenues reached €7.2 billion, creating a deficit of 6.3%, approximately the same as that of the last four years.

Since 2008, expenditure increased by €1 billion while revenues decreased by €0.2 billion.

The Minister said the new budget will have binding ceilings expenditure in order to reduce wastage in Ministries.

Each Minister, he added, would take over the reins of the memorandum commitments to develop the budget of his Ministry based on specific pillars.

According to estimates of the creditors of Cyprus, despite the cuts, the deficit of Cyprus will reach 7.7% of GDP and debt 123%, partly due to the expected reduction of costs.