GOVERNMENT confidence that the troika would issue a positive quarterly review of the implementation of the memorandum of understanding proved justified. “Our overall assessment is that Cyprus’ programme is on track,” said the report, adding: “All the fiscal targets have been met as a result of significant fiscal consolidation measures underway and prudent budget execution.”
The measures and the government’s “prudent execution of spending are yielding results, with the primary fiscal deficit in the first half of the year better than the programme target for the same period,” the troika noted. The government could not have hoped for a better assessment which would help silence outsiders who had been accusing it of not claiming ownership of the memorandum, dragging its feet over implementation and making too much of a fuss about the ELA debt.
There were issues that remained outside the powers of the government, another point noted by the report, which acknowledged that although “the authorities have started to implement the programme with determination, risks remain substantial.” The short term economic outlook remained difficult and “subject to considerable uncertainty”.
So while the government had every reason to feel pleased with the assessment it still contained nothing to raise the slightest glimmer of hope. On the contrary the troika expected the contraction of the economy to continue until the end of next year while it also saw a weakening of the labour market. The only positive that could be taken from the report is that it opened the way for the release of the €1.5bn by the ESM next month, the Eurogroup’s approval now a formality.
Nobody can see the light at the end of the tunnel yet, even though many of our populist politicians have been misleadingly claiming that we would be better off if we “disengaged from the memorandum,” conveniently ignoring that this would lead to bankruptcy. Others insist that we should undertake development projects, without saying where the money to pay for these would come from.
The reality is that there are no quick-fix remedies and the implementation of the memorandum, although painful and costly, is the only way of eventually putting our ailing economy on a sound and healthy footing. We destroyed our economy because of our short-term thinking, slapdash decisions and obsession with quick and easy profit. Now we have no choice but to do things the hard way and, for once, adopt the long term approach that everyone shunned.