Cyprus & World News

Cyprus parliament approves 2014 "austerity" state budget

20 December, 2013

The House of Representatives approved late on Thursday the 2014 state budget, the first based on the commitments undertaken by Cyprus in the framework of its economic adjustment programme with the Troika of international lenders (EC, IMF, ECB) in March 2013.

After amendments, the budget includes provisions for expenditure of 7.7 bln euros and revenues of 7.9 bln.

Thirty MPs of the ruling right- wing Democratic Rally (DISY), the centre-right Democratic Party (DIKO), the European Party (EUROKO) and independent MP Zacharias Koulias voted in favour of the budget, while 20 MPs from the main opposition communist AKEL, the Green Party and Citizens’ Alliance voted against. Four MPs from the Movement of Social Democrats EDEK abstained.

Finance Minister Harris Georgiades told the MPs this week that the 2014 state budget is focused on the reduction of expenditures.

The key feature of the budget, he added, is the reduction of costs, stressing that this reduction, excluding interest, repayments and reserves, reaches 10%. However, he said that the 2014 state budget will show a deficit, as it did this year as well.

Referring to taxes, he said that many new taxes have been imposed on the people in the past two years, but said that fortunately, those taxes can not affect business and investment activities.

"We will safeguard our tax system, like all the comparative advantages of our economy", he pledged.

Georgiades said that the government will combine the policy of fiscal consolidation, with an ambitious policy of modernization and reform.

In the next two years, he said, the government will promote radical reforms on the structure and function of the civil service, the social policy, the health insurance system, the tax authorities and state organisations.

Those reforms, he added, will enhance competitiveness and productivity.

Referring to the public debt, he said that in 2008 it stood at 8.4 bln euros while by the end of 2012 it rose to 15.4 bln euros.