Cyprus to work on recovery of economy in 2015

Cyprus’s government has the aim to approach the economy’s recovery trend in 2015, the country’s Finance Minister Haris Georgiades said in an interview with Itar-Tass. “We share generally the estimates from our counterparts that during the current year the GDP will fall by about nine percent, and by another four percent next year,” the finance minister said commenting on the outlook from experts of the European union and the International Monetary Fund /IMF/. “Nevertheless, it is impossible to rule out the slump may be even bigger. But the essence is not in the figures: be that seven, nine or eleven percent - it is bad anyway. This is a deep recession, which would cause major consequences for the country.” Georgiades said it was the price the country had to be paying now “for the lack of action and decisions, which should have been undertaken earlier to protect the economy.” “Thus now, things will become worse before stabilisation and recovery begin. The current and next years will be most complicated. Our objective is to approach the recovery trend in 2015, and all the efforts of the president and government are aimed at this. We are prepared for one or two complicated years and we believe we shall be able to overcome them.” The question from Itar-Tass was whether the government would be able to fulfil its obligations to creditors or would it require another programme to overcome the crisis. Georgiades said in reply: “We should fulfil the programme. We are facing the problems of the real economy, unemployment, filling the budget. The government is ready for making complicated decisions.” The minister stressed those decisions would be first of all connected with a strict control over state expenditures. “We shall continue cutting state expenditures to the level, which would be required to fulfil the budget objectives,” the finance minister said. “Here our position is that we shall not implement new tax raise, as under the conditions of the slump it would be counterproductive. Raised taxes over past two years have demonstrated no positive results.” He did not rule out privatisation of state companies or plans to sell the gold. Those projects would be under consideration as the anti-crisis programme is carried out. Presently, privatisation or selling of a part of the gold reserve “are not our priorities.” “However, all possible variants of the actions will be considered depending on the current economic situation,” Georgiades said. In March, the negotiations between the new government of Cyprus’s President Nicos Anastasiades and the tree international creditors /the European Commission, the European Central Bank and the International Monetary Fund/ ended in a memorandum on terms for a loan of ten billion euros, where the first tranche arrived in the island in mid April. In response, Nicosia promised to undertake certain tough economic measures and to reform its overblown banking sector, which was the entire basis of the national economy. The implementation of the programme will cause in short-term a slump of the economy, growth of unemployment to 15-17 percent and human impoverishment.