Cyprus’ fiscal deficit will reach 4.5% of GDP in 2012 if no measures are taken Government estimates.
Government Spokesman Stefanos Stefanou said today that if no measures are taken and based on the statistical data released for the first half of 2012, the fiscal deficit will fluctuate at around 4.5%.
Stefanou noted that as the Minister of Finance has said that based to the available data, the state’s liquidity will last until the end of October, if not later than that”.
"Of course, we always take this into account in our preparation and preliminary work with respect to the discussions with the Troika and the issues of fiscal consolidation and fiscal discipline," he added.
Replying to another question, Stefanou said that a provision for further cost reduction in the public sector of 40 million euros is also included in the package of austerity measures approved last June in a bid to address the fiscal challenges that lie ahead.
Invited to explain a previous statement he made regarding the fiscal deficit, the Government Spokesman said that "without measures and based on the data for the first semester of 2012 – and if this trend continues – the fiscal deficit will reach around 4.5%."
Referring to the package of measures approved last June, he said that some of the measures have already been implemented, adding that "some others are pending as a House decision is required."
He noted that when all these measures are implemented, then the data will change for the better.
He also said that "according to the preliminary data for July, it seems that things are improving compared to previous months. We will be in a better position to present these figures tomorrow. "
He stressed that "we monitor very closely the progress of public finances and at the same time we are taking those measures, when and if required, to hold on to our commitments or close to them, taking into account that the Cypriot economy is in recession."
Stefanou said that the Government’s commitment is to bring the fiscal deficit below 3%.
A Troika mission (representatives of EU Commission, European Central Bank and IMF) was here in early July on a fact-finding mission for a scrutiny of the banking sector, which has been severely hit by Greek sovereign debt haircut and over-exposure to the Greek economy, as well as the refinancing requirements of the Government.
It returned to Cyprus in late July for another week, to negotiate with the Government the bailout terms and conditions.
Consultations between the Government and the Troika continue with a view to conclude a memorandum the soonest possible.
