Cyprus to record fiscal surplus in 2007, says Finance Minister

Cyprus is expected to record a fiscal surplus in 2007 of around 1.5 percent of GDP,  Finance Minister Michalis Sarris said.
He told a press conference that the government’s vision is a “competitive economy for the citizen’s welfare”, adding that the economy is expected to achieve a remarkable rate of growth reaching 4.3 percent while inflation in 2008 is expected to reach higher levels.
The Finance Minister said Cyprus is an expensive country with high salaries in specific sectors of the economy and described the high consumer credit and borrowing as a sign of prosperity.
”We have managed to exceed our expectations and balance public finances, with the result of a small surplus in 2007,” Sarris told reporters. ”Our forecast is for a surplus of about 1.5 percent of GDP. It could be more or less, but approximately the figure will be
about there,” he added.
He further said that the public debt is on a downward course and is expected to reach 60%.
There are elements which put the Cypriots’ standard of living in a better position than the rest of Europe, said Sarris, while more jobs have been created and prices are being maintained at low levels without imposing new taxes.
He also referred to the government’s social package which has reached 125 million pounds and is aimed at the vulnerable groups of society.
On inflation, Sarris said that the increased oil prices and the price of grain will unavoidably push it upward in 2008.
However, the minister ruled out an increase in state handouts, or lowering heating fuel tax and capital gains on property sales, because of the newly-found windfall.
”If we reduce taxes (on property and heating fuel) it will increase demand and prices will go up,” Sarris told reporters.
Cyprus will enter the Eurozone on January 1st, 2008.