THE establishment of the Fiscal Council, approved by parliament on Thursday, after much moaning by deputies over the lack of consultation between the executive and legislature, was a welcome development. The Council will introduce some much-needed discipline in the management of public finances, something unheard of in Cyprus, where governments had been accustomed to mindlessly squandering the taxpayer’s money.
From now on, the government would have to submit its annual budget for approval to the Council which would evaluate budget forecasts, set spending limits for each ministry, monitor the management of the public debt and appraise fiscal risks. It would also monitor the finances of local authorities and semi-governmental organisations. In short, the Council would make sure that the state would be living within its means by supervising government budget plans.
This would be an effective way of exercising control over the president and the Council of Ministers that had the power to bankrupt the state and did so. The legislature which had this responsibility – by not approving or reducing spending stipulated in the state budget – failed spectacularly in performing this role, as we know only too well. For years the Christofias government was overspending without the legislature doing anything to stop this. The Fiscal Council, as an independent body, will have the power to cut spending and impose fines on state officials who fail to comply with its directives.
It was no surprise that Akel voted against the bill establishing the Council, which it branded a “domestic troika” that would continue the “neo-liberal policies, harsh austerity measures and cuts” beyond 2016 when Cyprus would be out of the assistance programme. It defies belief that the party, whose president bankrupted the state through his criminal squandering of the taxpayer’s money, would object to the establishment of a council that would ensure this would not happen again.
The “neo-liberalism” Akel is so strongly opposed to is nothing more than the introduction of much-need fiscal discipline – preventing the state from living beyond its means ever again.
We should again thank the Troika for forcing us to adopt this measure by making the release of the fifth bailout tranche conditional on its approval. Cyprus would have eventually set up the Fiscal Council, but the Troika’s intervention always speeds up the decision-making process.
The government should be commended for the person it put in charge of the Council, Demetris Georgiades, as he has no party connections and could be described as a hard-nosed, neo-liberal who will make sure the state will live and operate within its means.