Cyprus Mail
CM Regular ColumnistOpinion

The ‘strange’ actions of our finance minister

EU commissioners Dombrovskis and Moscovici reportedly angered finance minister Harris Georgiades

By Loucas Charalambous

THE LETTER sent by the European Commission to the finance minister, noting the worrying path that Cyprus’ public finances had started taking again, reinforced the disagreements and serious concerns about the 2017 state budget, publicly expressed, six days earlier, by the President of the Fiscal Council Demetris Georgiades.

What did the commissioners Dombrovskis and Moscovici letter, which reportedly angered finance minister Harris Georgiades, say? That Cyprus planned to deviate significantly from its medium-term target for a balanced budget in 2017, based on the draft budget it had submitted to the EU institutions.

The minister did not dispute the veracity of this observation. He even admitted in the end that, based on the budget he submitted to the legislature, instead of a balanced budget in 2017 we would have a deficit of about half a billion euro, which peculiarly he described as ‘marginal’. Half a billion means an increase in the public debt by three percentage points.

He also proceeded to describe as ‘strange’ the action of the commissioners, using a rather ridiculous argument: there were other states in the EU with similar or worse deficits that had not received a warning from the Commission. I really did not expect such a reaction from this minister.

Georgiades, it is generally accepted, was the right person for the right position after the bankruptcy of 2013. He showed will, perseverance, patience and determination. At one point he was even in conflict with the president in his effort to impose his views on the issue of fiscal consolidation. At a certain point, faced with the president’s unwillingness to confront the public servants, he submitted his resignation.

His behaviour in the last few months, however, shows a peculiar change. Suddenly, he seems to show laxness and is blindly complying with the decisions of the ‘para-ministry’ of finance set up at the presidential palace and run by the under-secretary to the president Constantinos Petrides who is Anastasiades’ go-between with public servants’ union Pasydy.

Georgiades, instead of trying to justify the irrational policy of the return to deficit spending and the increase of the public debt on the grounds that other countries also did this, should endeavour to follow the diktats of common sense. What others do, does not concern us. We should be looking at our own house.

Here, it must be made clear that it was not the stance of the Commission that was ‘strange’, in telling us that we could not resume the practice of creating deficits and increasing the already too high public debt.

What is ‘strange’ and paradoxical, at this time, is the announcement of pay rises for public employees – the only members of the work force that were almost, completely unaffected by the bankruptcy of the country – because we had foolishly decided that the 2018 elections were approaching and we wanted votes. Strange was the announcement about the abolition of the special contribution by high earners, the primary beneficiaries of which were public servants.

Strange was also the paranoid decision for the hiring of 3,000 layabouts as luxury ‘professional soldiers’ because Anastasiades and Disy chief Averof were of the view (stupidly, as it proved) that this would have won votes in the parliamentary elections. And it should be stressed here that in this schizophrenic decision (at a time when we are supposedly making a last-ditch effort to solve the Cyprus problem) Georgiades played a decisive part, even undertaking making the relevant announcement.

And in this way, he added another 50 million to state expenditure while also creating another few thousand fanatical enemies of a settlement. It is with these strange actions and the shameless pandering to Pasydy chief Hadjipetrou that instead of a balanced budget in 2017 we will have a deficit of half a billion euros and a corresponding rise in our huge public debt.

Dombrovskis and Moscovici are not to blame for this. They are just trying to prevent us from falling into the abyss, from which we have not come out yet, but we refuse to learn and will always be ruled by vote-seeking, populism and Hadjipetrou.

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