Almunia announces Commission recommendations for Cyprus’ economy

EU Economic and Monetary Affairs Commissioner Joaquin Almunia announced on Tuesday during a press conference the European Commission's recommendation to Cyprus to reverse the projected fiscal loosening in 2010 and beyond.

Almunia said that apart from the measures which have been approved this year in Cyprus the Commission has recommended that the government of Cyprus reverse the situation of the deficit in view of the data concerning the population and the ageing of the population.

Almunia said they believe that public finance in Cyprus for the period 2009-2012 might deteriorate, due to the world financial crises.

''We know that public finances in Cyprus face sustainability problems and we have talked about it in the past,'' he noted.

Almunia also said, ''national budgetary positions in the EU and elsewhere have deteriorated considerably in the last year and are set to deteriorate further on account of the economic crisis we are living through and the discretionary measures rightly adopted by member states to sustain demand and promote investment.''

''To limit the costs of the debt for generations present and future, it is crucial that governments devise an adjustment path whereby they commit to correct public deficits from the moment the economy starts to recover, which is expected to happen gradually in 2010. The Stability and Growth Pact provides the framework for this exit strategy and a return to sound and sustainable public finances in the medium-to-long term,'' he concluded.