Another ex-finance minister weighs in on GDP drop

The cost of the government’s actions will become evident in the medium-term and it have to take responsibility for its choices, former finance minister and opposition Disy MP Harris Georgiades said on Monday, responding to recent statistical analyses that showed Cyprus’ GDP shrunk in the second quarter of 2023.

Georgiades criticised the government for moving forward with the mass hirings it is planning for the civil service, which will see almost 2,000 employees being hired at once.

“Disy did not agree with and still considers the mass hiring in the civil service wrong, while we urge caution in relation to various allowance increases. The costs of these moves will emerge in the medium-term and we hold the government accountable for its choices,” he said.

He added that the opposition parties and coalition parties are being irresponsible in parliament, creating a “direct threat to the stability of our economy”.

He said that Disy had created a sound base for Cyprus’ economy over the past decade that they governed.

“The policies of Disy government over the past decade created a sound base, allowing the Cypriot economy to cope with external pressures with remarkable sufficiency,” he said.

On the current financial difficulties in the global economy, Georgiades said that careful movements are required to avoid derailment.

“Disy will continue to stand up against populism and irresponsibility, wherever and however they come,” he said.

Georgiades added that the country needs prudent economic management, emphasis on reforms and policies that encourage growth and investment.

“In this direction, we are still waiting to see the specific programme of the government,” he said.

The government had been under fire from opposition Disy and another former finance minister and the drop in GDP growth.

Last week, former finance minister Constantinos Petrides weighed in on the drop saying that “this needs to cause concern to the government and the (responsible and irresponsible) opposition.”

He added that aside from the Covid-19 pandemic, Cyprus had not seen a drop in GDP since 2014.

“Negative GDP, or a significant slowdown, usually precedes any crisis as it did in 2003 (a stock market crash that caused a significant shift in wealth) and 2009,” he said.

Commenting the day after Petrides, former Disy leader and MP Averof Neophytou said: “The negative developments in the economy, which were made public yesterday, will simply be the tip of the iceberg if serious and prompt measures are not taken.”

The government had tried to downplay the significance on the latest indicators, in a statement issued by the finance ministry which said Cyprus’ rate of growth remained the third highest in the EU and was higher than the Euro zone average of 0.9 per cent.

The finance ministry acknowledged, however, that the latest figures indicated a bigger slowdown than the original forecasts for the 2023-25 period. Taking into account these indicators and “taking into account the continuing sanctions against Russia, the forecast for the rate of growth of GDP for the whole of 2023 could be revised marginally downwards,” said the ministry.