International Monetary Fund estimates, as presented in the World Economic Outlook for 2011, are a “vote of confidence” for the Cypriot economy, Finance Minister Charilaos Stavrakis said Tuesday.
Speaking during a press conference in Nicosia, Stavrakis said that IMF estimates on the growth of the global economy are falling back, mainly due to rising oil prices and the subsequent downward pressure on potential growth, the uncertain situation in the countries of the Middle East and Africa, as well as the natural disaster that hit Japan.
IMF predictions on the growth rate of the Cypriot economy forecast a slightly lower growth rate of 1,7% for 2011, compared to 1,8% predicted last October. He said that the government's goal was 1,5%.
“The most important issue is that estimates concerning public finances are significantly improved” Stavrakis noted and referred to the new IMF debt forecast, which stands at 63,7% by 2014, compared to 70% before.
Noting that the figures are based on preliminary data, the Minister said that “we are doing even better than the final IMF predictions, particularly as regards to the current account balance”.
In particular, the IMF data predicts a budget deficit of around 4,5% of GDP in 2011 (the forecast was for 5,6% in October 2010), and of 3,7% in 2012 (5,4% in the October forecast). The IMF also predicts that public debt in 2011 will reach 63,4% of GDP (64% in the October forecast), 63,9% in 2012 (66,4% in the October forecast), 64,2% in 2013 (68,4% in October), before retreating to 63,7% in 2014 (70,02% in the October forecast).
“This is a vote of confidence by the IMF to the Cypriot economy” Stavrakis noted and added that the Fund provides a positive outlook for growth rates, a reduction in the budget deficit and the stabilization of public debt at a very low percentage in comparison to other Eurozone Member States.
Stavrakis also said that he is optimistic on accomplishing and even surpassing the fiscal goals for this year, adding that this will be achieved without resorting to additional measures.
“It is in our hands to follow the right economic policy, characterized by high economic growth rates and a constant improvement of public finances” the Minister said.
Moreover, he announced that Cyprus borrowed 20 million euros from a foreign market, by making use of the European Commercial Paper, with a “very competitive interest rate” of 3,05%.
On the pension system reform, Stavrakis said that he is going to meet with the social partners next Friday, in order to present to them the findings of the actuarial report, concerning the public and the wider public service.
This, he said, will allow a technocratic discussion to take place with the public servants and other social partners, on the basis of real numbers. The policy we have been following for the past two years, if pursued on a medium and long term, is set to solve a very significant potion of the problem, the Minister concluded.
