Cyprus budget surplus forecast for 2007-2010

Finance Minister Michalis Sarris has forecast that Cyprus will record budget surpluses of 0.5% in the next three years, perhaps even four, insisting that the surplus for 2007 will reach 1.5% of GDP.

Sarris is so confident of the improvement in state affairs that he pledged that “the CYP 74 mln package of social aid measures announced by the government, which represents a 1% cost on GDP will not lead him to change his forecast.”

“Every day we are witnessing an improvement in state finances,” Sarris told ANT1 TV, justifying the decision of the cabinet to proceed with the measures, and specifically the reduction in the tax for heating oil, which only a fortnight ago he had ruled out any concessions on the matter.

Sarris however cautioned that the 6.1 cent reduction in the tax is temporary, and only valid until March 2008, after which it will return to normal rates. Earlier, the government had slashed the tax rate by 4 cents.

He also said that the government will compensate petrol station owners for the loss sustained as a result of the surprise reduction. “The Ministry of Commerce is tabulating petrol station stocks, so that the adequate compensation is given.”