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Finance Minister Charilaos Stavrakis has reiterated he remains cautiously optimistic that growth rate will reach 2% during 2009.
Stavrakis was speaking on Wednesday after a meeting with former Finance Ministers of the Republic of Cyprus with whom he exchanged views on the course of the Cypriot economy, how the global financial crisis will affect it and what the possible options are to minimize the impact of the crisis.
“There were exceptionally interesting ideas, many of which are already being adopted by the Government and many others which will be studied”, Finance Minister added according to an official announcement issued today.
Stavrakis noted that “as it was decided yesterday at the monthly meeting of the Finance Ministers of the European Union the recommendation to the member states is for an expansionary fiscal policy of 1% of GDP preferably on investment expenditure and mainly infrastructure works”.
“This is exactly the economic policy we have adopted and followed in the last two months,” he pointed out.
He recalled that “we believe that what the Cypriot economy needs today is a boost of 200 million euro, which corresponds exactly to 1.2% of GDP,” he said. He explained that the Government decided to give that 200 mln euro boost by investing in the public sector and accelerating the implementation of the development programme, “which comparatively creates more job positions than if we were reducing taxes”.
Furthermore, he said that this is the policy of the Government, drawn up around two months ago, while the European Commissioner for Economic and Monetary Affairs Joaquin Almunia recommends to all European governments to follow.
Invited to comment on the forecasts of the European Commission, Stavrakis said that “European Commission has prepared a very pessimistic scenario regarding the projected growth rates of the Eurozone, with the expected average reduction to approach 2%”.
Cyprus is expected by the European Commission to record the highest growth rate in the euro area and the second best if Slovakia, which has entered the eurozone a few days ago, is also included”.
“We continue to believe that the forecast of 2% (growth rate in 2009) is feasible”, he stressed.
Noting that the external conditions are continuously being deteriorated, he said that “the target of the Government is to speed up all infrastructure projects so as to achieve this high growth rate”.
“Thus, I remain cautiously optimistic that we can reach 2%”, he concluded.
