2007 state budget approved

…CYP 3.31 bln revenue, CYP 4.06 bln expenditure

The Council of Ministers approved the state budget for 2007, that provides for a total revenue of CYP 3.31 billion and for expenditure of CYP 4.06 billion.

Minister of Finance Michalis Sarris said that the state budget shows increased revenue by 10,7% and increased expenditures by 1%. He explained that the increase of revenue is due to the improvement of the state’s tax collecting ability as well as due to the economy’s high growth rate reaching 4%.

Sarris added that the state of the Cyprus economy this year is a very good one, adding “it is a robust economy with a growth rate of around 4%, registered unemployment at 3,7%, fiscal deficit that will reach 2% by the end of the year, public debt 67% and inflation 2,6% that is slightly higher compared to last year”.

The Minister ruled out the possibility of new taxes in 2007.

“Our goal is to reduce the fiscal deficit to 1,6% of the GDP or CYP 140 mln and the reduction of the public debt to 64% compared to 67% that is today”, Sarris said.

He noted that the state budget favours the fields of education, health, research and innovation.

The Minister said that the increase of public debt includes an increase of development expenditures by 8,1% (or CYP 430,7 mln) and social expenditures by 7,6% (or CYP 434 mln).

According to Sarris, the 2007 state budget indicates a continuation of the “successful combination” of the purification of public finances with the growing and social state, the stable course towards the Eurozone, the continuation of the improvement of the standard of living and the reinforcement of the social coherence”

Referring to the convergence programme, Sarris said that the Cabinet decided to reduce at a yearly basis the deficit by 0,5% so that in 2009 the deficit reaches only 0,5%.

Regarding the adoption of the common European currency (Euro) by Cyprus, he said that the value of the Cypriot national currency (the Cyprus pound) will be locked to the Euro in June or July 2007.