Cyprus Mail
Business

Georgiades considers UCY’s 2.7% growth forecast optimistic

By Stelios Orphanides

Finance minister Harris Georgiades said that he does not share the University of Cyprus’s 2016 economic forecast of 2.7 per cent growth, the Cyprus News Agency reported.

“No, we at the finance ministry are much more reserved,” he told reporters on Thursday, according to the agency. “The finance ministry’s estimate is more reserved; we expect a further improvement in 2016 but not to that extent”.

The Cypriot economy, which emerged from a prolonged recession last year, is expected to grow 2 per cent in 2016 after growing a projected 1.5 per cent in 2015, according to the finance ministry.

“We have not overcome all the problems and we don’t believe that it will be easy to achieve an economic growth leap,” the finance minister said, adding that it would be good if the university’s “very positive” forecast materialised. “Until a year ago, the Economic Research Centre of the university was more reserved and was expecting the recession to last until 2015. We have to do much more to establish sustainable and high growth rates”.

The ERC said a year ago that it expected the economy to contract 0.4 per cent in 2016 before it revised its contraction forecast to 0.9 per cent in April. In August, the ERC revised its forecast upward to 1.1 per cent growth before once again revising it to 1.3 per cent in October. The finance ministry’s initial forecast for 2015 was of a 0.8 per cent growth rate which it gradually revised upward.

Georgiades publicly appealed to lawmakers to pass a bill on the establishing of Cyta Ltd, a state-owned company which will take over the operations of the state-owned telecom Cyprus Telecommunications Authority, the remaining requirement for the successful completion of the island’s economic adjustment programme in March.

The successful completion of the programme will allow Cyprus, which restored market access in October after issuing a €1bn 10-year bond at a 4.25 per cent average yield, to borrow the last tranche of bailout funds at more favourable terms.

The finance minister added that by fulfilling obligations by passing the draft law, would help Cyprus attract foreign investment and restore the country’s credit rating to investment grade. He added that establishing Cyta Ltd does not automatically imply the privatisation of the company, as Cyprus agreed to do three years ago.

“We have come a long way but we cannot afford postponing important decisions,” he said, voicing concern that after submitting the bill to the parliament in August, time was running out.
“We only have a month left,” he said.

All opposition parties, including DIKO, on which the government relied in the past to pass reforms required by its programme, said they would reject the Cyta Ltd bill.

Cyprus has so far borrowed less than €7.3bn from its international creditors of the total €10bn earmarked by international creditors for its bailout in 2013 as its economy and public finances performed better than expected.

On Tuesday, the International Monetary Fund disbursed a €126.3m tranche, raising its total contribution to €1bn.

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