Cyprus will maintain budget surplus, says Finance Minister Stavrakis

European Finance Ministers approved the Cyprus Stability Programme for the period 2007-2011, which aims to maintain the budget surplus and the gradual reduction in public debt by 2011.

The Cyprus programme was presented at the ECOFIN meeting Tuesday by Cyprus’ newly appointed Finance Minister Charilaos Stavrakis, who stressed that “we have a new government and new President in Cyprus, who aims to create a fair society, which relies on a strong economy.”

Stavrakis said the Christofias administration aims to deliver a budget surplus in 2008 and 2009 of 0.5% of GDP and thereafter increase the budget surplus to 0.7% of GDP by 2010.

Stavrakis, a former deputy Group CEO of the Bank of Cyprus, is keen to stress that while the present government is dominated by communist AKEL, the policy of balanced budgets with a surplus and a cap on spending will be maintained.

Stavrakis told the Cyprus News Agency that he is satisfied by the comments received from fellow EU finance ministers on the credibility of the Cyprus plan. A week ago the ECOFIN approved the Stability Plan targets set by Cyprus, but the European Commission, which scrutinized the plan, placed Cyprus among its high risk suspect list of countries amid concerns on whether the recent economic achievements are sustainable and can be maintained.

 

Regional centre

 

Stavrakis said the new government wants to take effective steps to make Cyprus a regional financial centre, offering top quality services to international companies setting up a base here.

“We are planning to meet with foreign investors, local lawyers and accountants in order to promote Cyprus,” he said, adding that the services sector has now overpassed the tourism industry as the biggest contributor to the economy.

A number of meetings have been arranged between the new Finance Minister with the members of the accounting profession, the bar association and the organisation for the promotion of foreign investments to Cyprus.

One of Stavrakis’ first priorities is to remove Cyprus from Russia’s tax black list and try to convince the Indian tax authorities not to seek a renegotiation of the tax treaty in place, which Indian authorities say allows companies to dodge taxes in India.