Cyprus Mail

Last ‘austerity budget’ cleared

Diko leader Nicolas Papadopoulos

By Elias Hazou

PARLIAMENT gave the nod to the 2016 state budget late on Thursday night, the last one to be submitted during the economic adjustment programme, with the opposition deriding claims that the island is on the verge of economic recovery.

The budget passed with 29 votes in favour in the 56-seat parliament, thanks to votes from ruling DISY, DIKO and the European Party.

The budget projects €5.941bn in revenues, corresponding to 33 per cent of GDP, and provides for expenditures of €6.636bn.
In 2016 the state will spend €576m on servicing its debt.

Three years of creditor-mandated fiscal belt-tightening and reforms have put Cyprus’ economy on the mend, with growth next year expected to reach around 1.5 per cent of gross domestic product – the highest in seven years.

The budget deficit will be “close to zero,” finance minister Harris Georgiades earlier told lawmakers, adding that reforms and tight-fisted spending – including shrinking a large public sector -would continue.

But the island continues to face challenges, including 16 per cent unemployment and a huge number of bad loans that are putting a drag on growth.

Although on the decline, public debt remains high at an estimated 105.1 per cent of GDP for 2016.

Addressing the House, DISY MP Prodromos Prodromou said that since the 2013 financial meltdown, which necessitated an international bailout, the state has managed to consolidate its finances.

But he also struck a note of caution, warning of the temptation, once austerity fatigue creeps in, of slipping back to “old habits” with reckless spending.

DISY’s Giorgos Georgiou said the current administration has overcome the extraordinary state of affairs it inherited in March 2013.

“Cyprus has had a very difficult time, but now the hard times are behind us. We are now in the final stretch to exit the crisis and the memorandum,” he said.

Opposition politicians did not miss the opportunity to throw back in the government’s face its own tagline that economic policy has been a “success story.”

Whereas the state may now be able to tap international money markets, the people are still experiencing economic hardship, they countered.

Unemployment is stuck at 16 per cent, 234,000 people are at risk of poverty, and 60,000 depend on food banks, said AKEL MP Andreas Fakondis.

The much-touted rebooting of the economy is a joke, chimed in EDEK’s Roula Mavronikola.

“This may be the last memorandum budget, which should give us joy, but on the other hand let us not forget that for the past few years it is not us, but the troika, who called the shots on our budget,” she remarked.

As is customary during the budget debate, lawmakers veered wildly off-topic, referencing the ongoing Cyprus peace talks.

DIKO’s Sofocles Fyttis said Greek Cypriot refugees are disheartened by what they hear on the news about the rights to be given to current users of properties in the occupied territories.

In her own opening remarks before the House, AKEL MP Skevi Koutra-Koukouma raised the issue of Greek Cypriot women claiming to have been victims of rape at the hands of Turkish soldiers in the summer of 1974.

Calling this one of the most tragic aspects of the Turkish invasion, the MP said the issue has been all but forgotten with the passage of time, although the pain suffered by these women has never gone away.

These women, she added, have suffered doubly, as the state has never come to their assistance.

A few months ago, after AKEL raised the issue, the ministry of labour agreed to discreetly look into the cases with a view to granting the women support.

“To our enormous surprise, we learned that a few days ago some of these women were summoned to medical boards or received letters asking them to furnish evidence medically certifying that they were raped 41 years ago!

“I really am unable to comprehend the rationale of the state services and the government. What I would like to observe, however, is that even at this late hour it is our duty to stand by these women and heal their wounds as far as that is possible.”

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