Central Bank Governor, Christodoulos Christodoulou said on Monday that that the government’s forecasts on the prospects of the state finances as included in the Pre-Accession Economic Program submitted to the EU are rather optimistic.
Speaking before the House Finance Committee, Mr. Christodoulou emphasized that the prospects of the government’s estimates will depend not only on the restraint of the state expenses, but also on the increase in state revenues.
Similarly, AKEL MP, Stavros Evagorou agreed with Mr. Christodoulou, describing as optimistic the government’s aim to drop the fiscal deficit to 5.4% for 2003. Mr. Evagorou anticipates that deficit is likely to exceed 5.7%.
The CB Governor said, however, that the drop in fiscal deficit and public debt does not depend exclusively on the government or the Finance Ministry and stressed that the aims included in the PEP may be achieved “with a great effort and rapprochement of fiscal issues”.
Fiscal consolidation is difficult
At this point, Mr. Christodoulou said that the expenses of the public payroll amount to £750 million with a growth rate of 8% per annum. The gap between the revenues and expenses is constantly increasing and “fiscal consolidation is not an easy task at this stage”.
IMF: Lack of special action plan
Mr. Christodoulou revealed that on its recent report submitted to the Central Bank and the Finance Ministry, the International Monetary Fund emphasized the need for Cyprus to adopt a special action plan to deal with possible international negative developments. The CB Governor said that the IMF and the EU have lately ascertained that for the past 15 months Cyprus proceeds to constant changes on its provisions and expressed the hope that this is only temporary.
Increase in retirement limit to 63 years
Responding to the relevant question, the CB Governor stressed the need to increase the retirement limit in the Civil Service to sixty-three years. It is noted that in many EU countries, the retirement limit has been set at 65 years, while the EU is considering increasing this limit to 67.
Speaking before the House Finance Committee, Mr. Christodoulou emphasized that the prospects of the government’s estimates will depend not only on the restraint of the state expenses, but also on the increase in state revenues.
Similarly, AKEL MP, Stavros Evagorou agreed with Mr. Christodoulou, describing as optimistic the government’s aim to drop the fiscal deficit to 5.4% for 2003. Mr. Evagorou anticipates that deficit is likely to exceed 5.7%.
The CB Governor said, however, that the drop in fiscal deficit and public debt does not depend exclusively on the government or the Finance Ministry and stressed that the aims included in the PEP may be achieved “with a great effort and rapprochement of fiscal issues”.
Fiscal consolidation is difficult
At this point, Mr. Christodoulou said that the expenses of the public payroll amount to £750 million with a growth rate of 8% per annum. The gap between the revenues and expenses is constantly increasing and “fiscal consolidation is not an easy task at this stage”.
IMF: Lack of special action plan
Mr. Christodoulou revealed that on its recent report submitted to the Central Bank and the Finance Ministry, the International Monetary Fund emphasized the need for Cyprus to adopt a special action plan to deal with possible international negative developments. The CB Governor said that the IMF and the EU have lately ascertained that for the past 15 months Cyprus proceeds to constant changes on its provisions and expressed the hope that this is only temporary.
Increase in retirement limit to 63 years
Responding to the relevant question, the CB Governor stressed the need to increase the retirement limit in the Civil Service to sixty-three years. It is noted that in many EU countries, the retirement limit has been set at 65 years, while the EU is considering increasing this limit to 67.
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