Cyprus Mail

Minister calls on all parties to pass budget, secure EU funding

Finance Minister Constantinos Petrides

Among the myriad problems caused by parliament’s possible rejection of the 2021 state budget, the government won’t be able to purchase vaccines for Covid-19, Finance Minister Constantinos Petrides warned on Tuesday.

Expenditures for the vaccine are included in the 2021 budget. The first batch of around 168,000 doses is expected to be delivered to Cyprus sometime in the next few weeks.

But that is now at risk, Petrides said.

“Of course we can’t pay for the vaccines in January,” he told CyBC radio.

Should parliament not pass the budget this week, the system has – on paper at least – a built-in contingency where the state can continue to be financed under a provision in the constitution that allows such payments.

But these payments – known as ‘twelfths’ – cannot exceed the equivalent for each month of the previous year. Moreover, spending can be executed only on items expressly included in the previous year’s budget (2020).

Given that expenditures on Covid-19 vaccines did not feature in the 2020 budget, under the contingency system no disbursements could be made for this item in 2021.

What’s more, Petrides expressed doubt as to whether the contingency spending system will work in practice at any rate.

And even if it does work, it won’t allow tapping into the extra funds allocated in the 2021 budget to supporting businesses and employees for the coronavirus situation. The support schemes are due to run until March.

“The 2021 budget features €742m additional spending compared to 2020, on relief schemes, welfare and development projects. All this gets locked up if the budget doesn’t pass,” Petrides said.

Also at stake will be €634m allocated to Cyprus by the EU’s Recovery and Resilience facility.

Petrides noted that the last thing Cyprus needs is a political crisis – the looming budget deadlock – on top of an economic crisis, which is certain to worsen unless the budget passes.

“Are we to become the only country not to use this facility? Since 2013 Cyprus has made strenuous efforts to return its sovereign credit rating to investment grade. What impression would we now give to ratings agencies if we reject the EU Recovery Fund? Won’t we lose all credibility?”

The minister again appealed to opposition parties to rise to the occasion and set aside petty politics for the good of the country.

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