The growth rate of the Cypriot economy, due to external factors, is expected to be maintained in 2008 within the levels of the past few years, that is around 4%, while employment will continue to increase and unemployment decrease to 3.9%, according to Cypriot Minister of Finance Michalis Sarris, who noted that the creation of new jobs would continue due to the improvement of the business environment and the confidence created by the adoption of the Euro on 1 January 2008.
Speaking before the plenary of the House of Representatives, which discussed the state budget for 2008, Sarris said the inflation rate would be around 2.5% as a result of the high prices of fuel.
Furthermore, the public surplus is estimated to be around 0.5% of GDP. The decrease in the surplus compared to 2007 is due to the temporary nature of part of income for 2007, recent tax reductions, and the full implementation of social cohesion measures.
Public debt will drop below 50%, thus breaking the barrier of 60%, which was an important commitment for entering the Eurozone.
Sarris said these projections are based on the evaluation that there will be no unforeseen events that would have a toll on the economy and public finances, such as drastic increases in the price of crude oil and geopolitical tension in the region.
In his speech, Sarris noted that ”the implementation of a correct financial policy by the Government contributed to the establishment of a robust economy, which is characterised by high growth and employment rates, and the strengthening of the welfare state.”
”We managed to create a sound basis on which we will successfully build after our accession to the EMU, a policy to the success of which all parties participating in the Government contributed to. We will remain focused on the successful policy of the past few years with the ultimate aim of social progress and the welfare of the citizens,” Sarris said.
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Sarris noted that the Government was implementing an action plan for the adoption of the Euro, based on the previous experience of other EU member states.
On the state budget for 2008, the Minister of Finance said it continues to serve the ambitious fiscal aims set by the Government and will enhance social cohesion and the growth policy.
He pointed out that emphasis has been given to the sectors of health, education, energy, road safety and social cohesion, which have been recording increased needs in funds.
Sarris said the budget provided for an increase in net income by 4.9% compared to the revised income for 2007, while the net public expenditure would rise at a reduced rate of 7.7%, compared to 14.8% in 2007.
Development expenditure for 2008 is calculated at 553.2 million Cyprus pounds (one Cyprus pound is trading at approximately 1.7 Euros), compared to 433.7 million pounds in 2007, with increased credit for education, health, projects concerning energy, the development of technological parks, the attraction of foreign investment, the protection of the environment, the sanitary disposal of waste and infrastructure works.
Sarris said the social character of the budget is reflected in the significant increase of social benefits, noting that the Government has enhanced social cohesion by implementing a series of measures over the past few years to improve the standard of living of vulnerable groups of the population.
Cyprus growth rate to be around 4% for 2008
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