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Cyprus

Fiscal council cautions govt on use of available reserves

Fiscal Council chief Demetris Georgiades

The government should not use all its available reserves because no one knows how long the coronavirus crisis will last, the chairman of the fiscal council said on Friday.

“No one can know how long this crisis will last so we must save ammunition,” he said. “we must keep in mind where we will be the day after the crisis; where will the public and private debt be.”

Demetris Georgiades said both must be manageable after the crisis.

Weighing in on the debate raging among parties over a €2bn state guarantee scheme, Georgiades said he considered going through commercial banks a more rational approach.

Opposition parties Akel and Diko have expressed disagreement with the government proposal to boost liquidity through state-backed loans.

They instead propose the state borrowing the money, thus raising public debt and risking a ratings downgrade, and handing it out to people directly.

Diko suggested having the auditor-general in a supervisory role to ensure there will not be any abuses of the system.

 

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