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Economist: Clerides most likely winner of elections

20/01/2003 08:45
... though there is considerable uncertainty

Budget deficit to exceed Maastricht criteria?

The Economist Intelligence Unit (EIU), subsidiary of the British paper Economist, expects that current President Glafcos Clerides is most likely to win the presidential election that are to take place on February, although the final outcome is still uncertain. Clerides’ profile as an efficient negotiator and statesman will give him a boost, while the analysts of the EIU expect the co-candidate Papadopoulos to adopt a less flexible policy over Cyprus problem.

With regard to government’s economic policy, EIU anticipates the budget deficit to exceed the relevant Maastricht criterion in 2002, reaching 3.2% before falling to 2.7% in 2003. The EIU expects the GDP to grow by 4% (2003) in case of a solution (5% in 2004).

The Finance Ministry estimates that growth rate is to reach 4.3% in 2003 (irrespective of a solution) and hence expects the budget deficit to remain within the confines of Maastricht. The discrepancies over budget deficit estimates are also due to the EIU's expectations that the government's fiscal stability program will confront pressures from the Left. Parties of the left are likely to seek the expansion of the Welfare State, undermining attempts for fiscal consolidation.