It is not common practice for the government to consult the political parties about the state budget. If anything, the budget is one of the main issues of disagreement – and a source of political debate – between the government and the opposition parties, which often block items of expenditure to create difficulties for the government.
This year, finance minister Constantinos Petrides decided to do things differently, embarking on a round of contacts with all the political parties for consultations on the 2021 budget, which he described as an ‘emergency budget’ as it will have be geared towards economic recovery as well as support of the economy, for dealing with the effects of Covid-19.
Last week the minister met the leadership of Akel, which had been the fiercest critic the government’s economic policy in the last few years, labelling it ‘neo-liberal’. Akel, ideologically, has always supported an expansive economic policy with growth being powered by state spending on development projects as well as welfare schemes. The government, in contrast, after the 2013 crisis has been budgeting for surpluses, so it could gradually reduce the public debt.
The pandemic has changed everything, as most European governments have set aside the idea of balanced budgets in order to protect jobs and help businesses through the slump. Cyprus’ government has also opted for this type of policies and has decided to try to secure the backing of all the political parties. As Petrides said, after his Akel meeting, the country was going through “a critical period which puts at risk our economic prosperity and economic development”. This made it an imperative for everyone to work to together.
The government needs ideas in order to make the most of the assistance on offer from the EU’s Recovery Fund and Akel, according to the minister, made many suggestions. As part of the government’s collection of proposals, Petrides has met other parties as well, the hope being the building of a broad consensus. Pandering to all parties for the sake of consensus, generally speaking, is not a good idea, but these are extraordinary economic circumstances we are living through, making unity a necessity.
This consensus building could have another positive effect – the government securing the majority necessary for approval of its planned reforms that opposition parties have been blocking or unjustifiably delaying, some for years now. Petrides has suggested that economic support from the EU would depend on the Cyprus implementing reforms of the public service, local government and the justice system. The unity the government is pursuing to which the opposition parties are not averse, could help move the country forward, apart from propping up the economy.