Stavrakis calls for fresh private investment in Cyprus

Minister of Finance Charilaos Stavrakis has called businesspeeople to begin investing again, in order to boost the real economy.
“The very big and unexpected reduction on the private consumption has created a negative growth rate of the economy during the second quarter of 2009”, he said on Tuesday.
Invited to comment on the -1.1%fall of GDP rate during the second quarter, Stavrakis said that the key for growth is private investment and private consumption, and called on businesspeople to begin investing again. He said that next Friday, the first government’s official forecasts for 2010 regarding unemployment, growth rate, inflation, and public finances will be released.
Speaking after a meeting with the Green Party’s Secretary General Ioanna Panayiotou, the Finance Minister said that the second quarter of 2009 was very bad with negative growth rate.
“While the public investments and consumption recorded a considerable increase of 10%, and especially in the sectors of public constructions, the private sector has shown a considerable shrinkage on consumption, despite the fact that the incomes of the private sector have increased by 5%.
Saying that consumption is the biggest contributor to GDP, Stavrakis noted that private consumption restraint is caused by the market’s bad psychology, the already existing over-lending of households, the high lending interest rates, and the banks’ pressure.
Replying to a question on the effort to save on public spending, Finance Minister said the effort is to find ways to reduce the operational expenses, and gave an example of the Ministries’ telephone bills.
Asked about the income from delayed tax payments or tax evasion, Stavrakis said that in the past ten months, more than 80 mln euros was collected, stressing that it is a considerable amount, bearing in mind the absence of any legislative or institutional framework.