Cyprus Mail

Finance minister submits first post-bailout budget to parliament

Finance Minister Harris Georgiades said the properties were worth €82m

The state budget for 2017 creates the conditions for sound and sustainable management of public finances, which will assist and support economic growth, Finance Minister Harris Georgiades said on Friday.

Georgiades was speaking after submitting the state budget for 2017 to House President Demetris Syllouris, to mark the start of the examination and approval procedure by the plenary by the end of the year.

This is the first budget to be drafted following Cyprus` exit from the three-year economic adjustment programme last March.

“This is another budget that is essentially balanced,” said Georgiades.  “I think this creates the conditions for a healthy, sustainable management of public finances to help and support the growth of the economy.”

The budget, he added, includes significant tax cuts but without moving away from clear objectives.

“In this way, through prudent management of public finances, by avoiding the creation of deficits and swelling debt, we can create the conditions for long-term growth of our economy,” he added.

Georgiades said that the most significant variation of the 2017 budget related to the assumptions on which the budget is based, which were more realistic, conservative, and checked and confirmed by the independent fiscal council. He also reiterated that his ministry would prepare a proposal for a new tax amnesty.

Syllouris assured that parliament would examine the budget within the timeframe.
According to the targets of the Fiscal Policy Strategic Framework, public revenue for 2017 is estimated to reach €6.9 billion, marking an increase of 1.1 per cent compared with €6.8bn in 2016, whereas total general government expenditure in 2017 would reach €7.07bn, an increase of 2.3 per cent over 2016.

The 2017 central government primary expenditure (excluding debt servicing costs) are projected to reach to €6.15bn up by 1.6 per cent over 2016, whereas total expenditure is projected to reach €7.13bn, down by 3.4 per cent compared with €7.39bn in 2016, due to the decline of average borrowing costs and consequently the further reduction in interest rate payments.

The fiscal balance for 2017 is estimated to be in the region of 0.6 per cent of GDP compared to 0.3 per cent of GDP in 2016.

The 2017 budget does not include revenue amounting €175 million from the temporary scaled contribution that expires on December 31, 2016 as well the immovable property tax, set to be abolished by parliament.

Debt servicing expenditure for 2017 are estimated to reach €499m down by 13.3 per cent compared with €576m in 2016.

The public wage bill is projected to reach €2.3bn, up by 3.7 per cent compared with 2016, whereas social transfers, that include welfare benefits, are projected to reach €2.57bn, marking an increase of 1.3 per cent compared with €2.53bn in 2016.

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