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Fiscal deficit '02 close to FinMin estimates

29/01/2003 12:21
The Chairman of Economic Studies and European Union of the Finance Ministry, Andreas Charalambous told StockWatch on Wednesday that the fiscal deficit for 2002 will be close to the Ministry’s initial estimates. The Ministry’s experts are on the final stages of preparations and according to preliminary data, the fiscal deficit for 2002 is to reach 2.7% Mr Charalambous stated that there is a possibility of a minor upward revision of the final number but the deficit will remain within the confines of the Maastricht criteria.

The £20m fine to CYTA by the Competition Regulator and the £60m surplus that will be transferred from CYTA and EAC accounts to government funds will positively contribute to fiscal deficit, as this would otherwise be CYP 80 million higher.

“The government is the sole owner and hence the sole beneficiary from the surpluses of the two organization. The Finance Ministry considers that the surplus to exceed that the amount needed for their development, thus, their accumulated profits in their reserves are regarded as revenues”, Mr. Charalambous said.

Meanwhile, according to Ministry’s estimates, this year’s deficit will stand at 2.1%, while the Pre-accession Economic Program estimates that the deficit would be eliminated by 2005.

The relevant Maastricht criterion among the EMU member states sets the deficit at 3% and the Stability Pact (1996) provides the imposition of fines to all countries that will exceed the set limit. The international economic recession, however, has led Europe’s largest economy and supporter of the pact, Germany, to deviate from Maastricht criteria, as the country’s fiscal deficit climbed to 3.75% in 2002.