Cyprus Finance Minister Charilaos Stavrakis presented the Stability Programme to the press on Wednesday, which envisages to curtail budget deficit from 6.1% of GDP in 2010 to 2.5% by 2013.
The plan also envisages to containing public debt to 61% by 2013, whereas it projects ''positive but slow growth of 0.5 percent in 2010 and a subsequent gradual recovery during the programme period to around 3.0 percent by 2013.''
''We have unofficially agreed with Europe to be granted a timeframe of four years to reduce the deficit so that it would not be necessary to do so in just one year as this would have dramatic effect in the Cypriot economy,'' Stavrakis said presenting the plan, adding that the key point is the envisaged reduction of the budget deficit to 2.5% by 2013.
The fiscal consolidation measures envisage the reduction of the overall number of employees in the broader public sector, aiming at a reduction of 1.000 per annum, the containment of rate of growth of total wage bill in the public and broader public sectors.
To this end, Stavrakis said that the President of the Republic will launch a dialogue with the Public Servants Trade Union.
The measures also feature a 10% reduction of the emoluments of the State Officers, including the President of the Republic, Ministers and Members of the Parliament.
Furthermore, the government intents to introduce the concept of targeting of social transfers on the basis of income criteria, as well as to terminate the policy of reducing excise duty on heating oil during winter season.
The programme also includes a set of legislations that would assist the combating of tax evasion and tax avoidance, as well as the introduction of a town amnesty plan, for buildings constructed with minor irregularities and would accelerate deed issuances blocked for years.
According to Stavrakis, the plan also includes the application of the minimum excise duties prescribed by the acquis communautaire on petroleum products, the application of the reduced VAT rate on foodstuffs and pharmacuticals as prescribed by the acquis, as well as the reform of the pricing policy of the water usage as prescribed by the EU acquis.
In his statements, Stavrakis said that the measures cannot be considered ''harsh and painful.''
He recalled the example of Greece which four years ago was in a position similar to that of Cyprus but instead of taking measures followed a policy of fiscal slackness.
''If the measures are timely taken, combined with the reduction of the public operational expenditures we will be able to avoid the worse,'' Stavrakis noted.
