Cyprus Mail

Georgiades says economy still not out of the woods

Finance minister Harris Georgiades said that Cyprus has a long way to go before overcoming the effects of the fiscal and banking crisis of the past years, adding that state-owned companies are in need of modernisation.

Georgiades, who was addressing a conference of OIO-SEK, a union representing workers at state-owned companies, said that state-owned companies such as the Cyprus Telecommunications Authority, widely known as Cyta, and the Cyprus Stock Exchange, “urgently need to modernise and adjust to the requirements of the current era”.

“Neither can continue operating in the same framework as in the past, when conditions were completely different,” he said according to an emailed statement.

The government, which last year abandoned a privatisation plan agreed with international creditors after it encountered opposition from unions and political parties, is now considering finding strategic investors for Cyta to acquire a minority stake. The Cypriot economy expanded last year 2.8 per cent and is expected to continue growing at a similar pace this year, with unemployment remaining in the double-digit area. While the government generated last year a fiscal surplus of 0.4 per cent of economic output, public debt stood at 107.8 per cent. The economy, rated by all major rating companies in the non-investment grade, is plagued by a mountain of non-performing loans, roughly half of the banks’ entire loan portfolio.

“Through political consensus and far from ideological negation, we can find acceptable arrangements, creating prospects for these corporations, while maintaining completely workers’ rights and ownership control by the state in the presence of a strategic investor,” the finance minister said.

He added that the government, which four months ago agreed a two-year moratorium on pay increases with civil servant union Pasydy, which exempts incremental pay hikes this year and compensation for purchasing power lost to inflation from 2018 onwards, considers resorting to the practice of the past of “uncontrolled hirings” in the public sector which ultimately led to a fiscal derailment eight years ago, irresponsible.

In a separate statement, Georgiades expressed his satisfaction over the parliament’s decision earlier on Friday to indefinitely extend a hiring freeze of civil servants, made necessary following the rejection by a majority of a bundle of reforms overhauling the human resource management in the public sector in December.

“It is an extremely important decision that will decisively contribute in averting the repetition of the mass and uncontrolled hirings of the past that led to an inflated public payroll,” he said.

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