Legislators on Monday gave the government a week to come back with clarifications on the operation of the national investment fund that is to be set up to manage future revenues from hydrocarbons.
During a discussion at the House finance committee, MPs posed a number of questions to government officials on the fund’s operation and administration. Officials agreed to come back with answers by next Monday.
Committee chair Angelos Votsis (Diko) said later that it was agreed the bill would go to the House floor for a vote on February 15.
It has been over two years since the government bill establishing the investment fund was tabled to parliament. Lawmakers have drafted several amendments, some of which have been accepted by the government while others are being considered.
Last week President Nicos Anastasiades met with party leaders, where it was agreed to expedite passage of the bill.
Some of the pending questions include the composition of the fund’s board, matters of accountability and conflict of interest, and whether the fund will be subject to audits by the auditor-general.
Other matters pertain to channelling part of the proceeds to developing renewable energy sources, to social policies or paying down the national debt.
As it stands, the bill stipulates that as long as the public debt is above 80 per cent of GDP, half the hydrocarbons revenue would go towards reducing this debt.
When it is below 80 per cent but above the limit of 60 per cent – set by the Maastricht criteria – only 25 per cent of revenue would go towards the public debt and the rest would be used for the creation of reserves.
Once gas revenues start flowing in – not for years to come – the fund is expected to aggregate hundreds of millions.
Akel MP Stefanos Stefanou said the fund should be structured in a way that ensures the proceeds are set aside for future generations and for creating infrastructures, rather than for plugging deficits.
His party, he added, does not understand why the government is now in a hurry to have the bill passed.
Care should be taken so as not to cause any damage to the Cyprus issue, said Stefanou.
He was understood to be alluding to the demand by Turkish Cypriots to have a say in the administration of natural gas revenues, something the government rejects as long as the island remains divided.
It was not clear whether a previous proposal floated – diverting a portion of the gas proceeds into an escrow account for Turkish Cypriots while the island remains divided – still stands.
Under the so-called ‘convergences’ reached in talks between former president Demetris Christofias and then-Turkish Cypriot leader Mehmet Ali Talat, it had been agreed that in a reunited Cyprus each constituent state would be responsible for its own debt. That is to say, at the time of reunification no constituent state would be able to tap the federal budget to pay down its own debt as it stood then.
At the same time the convergences provided that national reserves would be used to fund infrastructures for both constituent states.