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FinMin: Economy will recover if there’s no setback

28/06/2021 16:27

If there is no setback as regards the economy and the pandemic, the economy will recover without derailment, said on Monday Cyprus` Minister of Finance, Constantinos Petrides.

Petrides was briefing the parliamentary committee on Finance about a supplementary budget for 2021 amounting to €148.5 million, with an impact on public finances of 0.71% of GDP. This is the second supplementary budget this year after the additional €250 million, which were approved by the Ministry last March.

Petrides, furthermore said that the Ministry estimates a growth rate of more than 4% of GDP for 2021, compared to the more conservative predictions by the European Commission for a growth rate of 3.2%.  He said however that the forecasts must take into account the high degree of uncertainty, due to the evolution of the coronavirus pandemic.

Regarding the fiscal balance, Petrides said that they estimate a deficit of 4.7% of GDP in 2021 compared to 5.4% in 2020, while unemployment is expected to rise to 7.4%. He added that amid the pandemic the goal was to go to the markets and build stocks in order to support the economy in the, while now the policy provides for the reduction of public debt.

He added that it is estimated that the debt-to-GDP ratio will decrease to 112% at the end of 2021 from 119% in 2020, noting that the strategic goal was not to exceed 120%.

"We believe that with these data, if there is no major setback to the economy or the pandemic, we will recover without derailment," he added, noting that the predictions take into account reduced tourism revenues.
In his statements after the session of the Committee, the Ministry of Finance directly linked a possible setback with a deterioration of the epidemiological situation and possible new restrictive measures, which, as he said, will have a different impact compared to the beginning of the pandemic.

He once again urged everyone to show collective and individual responsibility and trust science, so as not to create unemployment or further debt, but to move forward.