Cyprus Mail

Georgiades scores Eurogroup victory as EU takes back recommendations

Finance minister Harris Georgiades said that the euro area’s finance ministers have accepted Cyprus’s position that the government doesn’t need to take additional fiscal measures, and withdrew earlier recommendations that sparked a war of words with the European Commission months ago.

Georgiades, who was commenting on state radio CyBC a day after the meeting of the euro area’s finance ministers, widely known as Eurogroup, said that a member state with a balanced budget and the highest primary fiscal surplus cannot be asked to take measures which could negatively affect economic growth.

“Let me clarify that this in no way means that we asked for and got fiscal relaxation,” Georgiades said. “We remain committed, we are the first to realise the need of continuing the very prudent fiscal management”.

On December 5, the Eurogroup said that the draft budgets submitted by Cyprus and seven other member states risked being non-compliant with the provisions of the stability and growth pact and asked them to take action to address the situation. In October, Georgiades described the Commission’s recommendations to further increase the primary balance, which is the difference between government revenue and expenditure excluding net interest payments, as “absurd”.

The chairman of the euro area finance ministers collegium, Jeroen Dijsselbloem, said on Monday that the Eurogroup will follow up in May with reviewing the implementation of member states’ budgetary plans “to make sure that all of us remain under the framework of the stability and growth pact”.

Georgiades said that the Eurogroup will speed up the revision of the current methodology of the fiscal rules which prompted the Commission’s recommendations.

The finance minister also said that the government, which faces elections in 11 months and weeks ago agreed to make concessions to medical workers after they held a prolonged strike a year ago, will continue with its reform agenda. The government, he said, has prepared a draft bill on the partial privatisation of state-telecom company Cyta by “approaching the positions of opposition parties”, which ensure that the government remains majority shareholder and that current staff will see no change in their employment status.

He said that the government removed provisions that would allow Cyta employees to be transferred to other government departments and added that the bill also provides for the hiring of staff by Cyta on private sector terms.

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