Finance Minister Haris Georgiades has expressed optimism that the first evaluation of the economic adjustment program for Cyprus by the Troika will yield a good outcome.
"The Government has worked intensively during the past few weeks. I am optimistic that we will have a good outcome through the evaluation process”, he noted during a press conference one day before Troika’s assessment starts.
The Minister assured of the government’s readiness to implement an extensive modernization program.
He said that the 2014 budget will show a decrease in government spending of around 11%, which is equivalent to 700 million euros, compared with the corresponding spending in 2013, excluding interest expenses.
No new taxes will be imposed, he vowed, as taxes included in the Memorandum of Understanding with the Troika and already in place have failed to yield the anticipated results.
Stressing that the state payroll should be reduced, Georgiades said this goal would not necessarily be achieved through new pay cuts in the public sector, but by containing and downsizing the public service, in strict compliance with the policy of zero employment in the public sector over retirements but also by reviewing all overtime benefits and shift allowances.
In his statements, Georgiades separated the adjustment program into three pillars, namely the structural changes, the public finances and the financial sector, which he described as the most critical.
On the financial sector, Georgiades reiterated the need for the Bank of Cyprus to exit the resolution regime, adding that the Finance Ministry is in constant contact and cooperation with the Central Bank, which as the resolution authority, is responsible for the completion of the consolidation process of the Bank of Cyprus without any further delay.
“The fast and without any further delay exit of the Bank of Cyprus from the resolution regime will allow us to proceed with new decisive steps in relation to the restrictions imposed, the easing and finally the complete lifting of restrictive measures," he explained.
Georgiades said that the 2014 budget is being prepared, adding that the ceiling for expenditure and for the overall government budget as well as the ceiling for expenditure by the Ministry or by any independent agency has already been set out.
Asked if there is a commitment to sell gold reserves, Georgiades said that although the possibility of selling gold as an option of reducing the debt of the Republic is included in the Memorandum, no such decision has been taken.
On March 25, Cyprus agreed with the European Commission, the European Central Bank and the International Monetary Fund, collectively known as the Troika, on a €10 billion bailout, which included the winding down of Cyprus Popular Bank the island`s second largest bank, whose assets and employees were absorbed by Bank of Cyprus (BoCY), the island`s largest lender, which is currently undergoing a major restructuring.
