24/06/2003 08:20
The fiscal deficit for the first two months of 2003 was shot at CYP 84.1 million, raising concerns on the inability of the Cyprus government to reduce expenditure, despite the commitments to the European Union. The deficit, which is far too higher than the CYP 19.1 million deficit of the first two months of 2002, is attributable to the increased public expenditure.
Specifically, the government expenditure for the first two months of 2002 totaled CYP 405.1 million against CYP 291.4 million in the corresponding period of 2002 (+39%). The corresponding increase in 2002 hardly totaled 4.5%.
The deficit could have been even higher should there was no increase in the state revenues. Pursuant to the Finance Ministry’s data, the state revenues for the first two months of 2003 amounted to CYP 321 million compared to CYP 272.3 million in 2002. The revenues have shown an increase of 17.9% against a decline of 10.5% in the first two months of 2002.
The increased expenditure are mostly attributable to the salaries and wages of the civil servants, which increased from CYP 87 to CYP 99 million, as well as the current payments that increased from CYP 49 to CYP 93 million. The revenues have showed an increase due to the VAT (from CYP 56 to CYP 65 million) and the consumers’ tax (from CYP 29 to CYP 45 million), while revenues from the income tax dropped from CYP 49 to CYP 45 million.
State’s fiscals
According to the preliminary forecasts of the Finance Ministry, the fiscal deficit for 2003 is expected to reach 5.3% of GDP, which is double the relevant Maastricht criterion.
The complementary budget of CYP 316 million approved by the Council of Ministers on June 11, 2003 will contribute substantially to the state’s fiscals. The government has announced that the complementary budget will cover expenditure for which no adequate (or not at all) provisions had been made in the Budget for 2003”.
This year’s deficit will be partly covered from the transfer of stock from CYTA’s and EAC’s funds. According to the statements of the CB Governor, the deficit could have been 1% higher if the government hadn’t drawn sums from the two semi-governmental organizations. It is noted that in 2002, similar transfers reduced deficit to 3.5% of GDP.
If Finance Ministry’s forecasts come true, this year’s deficit of 5.3% will be higher than in 1998.
Towards a recovery?
Commenting on Cyprus’ fiscal situation, economic analysts repose their hopes in the possible recovery of the island’s economy for the second half of 2003.
The decline in the tourist industry for the first half of 2003 does not justify such optimism. However, Finance Ministry’s technocrats told StockWatch that tourism will recover as from July.
Meanwhile the figures from the retail trade are fairly encouraging, since CTC, Woolworth, Cristis and Chris Cash and Carry expect improvement in their financial results for the first half of 2003.
Specifically, the government expenditure for the first two months of 2002 totaled CYP 405.1 million against CYP 291.4 million in the corresponding period of 2002 (+39%). The corresponding increase in 2002 hardly totaled 4.5%.
The deficit could have been even higher should there was no increase in the state revenues. Pursuant to the Finance Ministry’s data, the state revenues for the first two months of 2003 amounted to CYP 321 million compared to CYP 272.3 million in 2002. The revenues have shown an increase of 17.9% against a decline of 10.5% in the first two months of 2002.
The increased expenditure are mostly attributable to the salaries and wages of the civil servants, which increased from CYP 87 to CYP 99 million, as well as the current payments that increased from CYP 49 to CYP 93 million. The revenues have showed an increase due to the VAT (from CYP 56 to CYP 65 million) and the consumers’ tax (from CYP 29 to CYP 45 million), while revenues from the income tax dropped from CYP 49 to CYP 45 million.
State’s fiscals
According to the preliminary forecasts of the Finance Ministry, the fiscal deficit for 2003 is expected to reach 5.3% of GDP, which is double the relevant Maastricht criterion.
The complementary budget of CYP 316 million approved by the Council of Ministers on June 11, 2003 will contribute substantially to the state’s fiscals. The government has announced that the complementary budget will cover expenditure for which no adequate (or not at all) provisions had been made in the Budget for 2003”.
This year’s deficit will be partly covered from the transfer of stock from CYTA’s and EAC’s funds. According to the statements of the CB Governor, the deficit could have been 1% higher if the government hadn’t drawn sums from the two semi-governmental organizations. It is noted that in 2002, similar transfers reduced deficit to 3.5% of GDP.
If Finance Ministry’s forecasts come true, this year’s deficit of 5.3% will be higher than in 1998.
Towards a recovery?
Commenting on Cyprus’ fiscal situation, economic analysts repose their hopes in the possible recovery of the island’s economy for the second half of 2003.
The decline in the tourist industry for the first half of 2003 does not justify such optimism. However, Finance Ministry’s technocrats told StockWatch that tourism will recover as from July.
Meanwhile the figures from the retail trade are fairly encouraging, since CTC, Woolworth, Cristis and Chris Cash and Carry expect improvement in their financial results for the first half of 2003.
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