Cyprus Finance Minister presents 2009 state budget

Cyprus Finance Minister Charilaos Stavrakis presented the 2009 state budget, which he described as “socially sensitive and balanced” and based on development.
The budget was approved by the Cabinet.
He said economic growth is projected at 3.7% with an estimated 0.7% fiscal surplus of the GDP. Inflation is expected to reach 2.5 – 3.0% and public debt is expected to decline to 45% in 2009.
Stavrakis underlined that no taxes will be imposed, noting that the government will focus on strengthening its tax collecting capacity.
The Budget provides for revenue of 6.37 bln euro, (excluding loans) an increase of 4.7% compared with the 2008 revised revenue of 6.08 bln euro, and total expenditure of 7.36 bln euro, (excluding payment of loans) which represents an increase of 10.9% compared to 6.64 bln euro in 2008.
He added that Cyprus President Demetris Christofias' programme envisages a robust and competitive economy and strengthening of the welfare state.
Social benefits and allowances are increased by 27% providing for 1.03 bln compared to 816 mln euro in 2008
Stavrakis noted that the 2009 budget focuses on development, providing for a 16.2% increase in development expenditure which will reach 1.01 bln euro with more than 30 development projects exceeding one million euro.
The Finance Minister underlined however that the dangers emerging from the continuing decline of the global financial markets, the economic slowdown, possible increase in oil prices combined with the increase in food prices may produce inflationary pressures.
He warned that the challenges Cyprus may face in the coming year include a slowdown of the construction sector, which is considered one of the driving forces in the Cypriot economy.
''We expect a significant slowdown in consumption and therefore of revenues from Value Added Tax,'' he added.
The 2009 budget will be tabled to the Parliament for approval, after a debate at the House Finance and Budget Committee.