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With next year’s presidential polls tentatively set for February 18 and February 25 for a probable runoff, all political parties have unleashed their election campaigns, with the opposition groups slamming the present government’s every move and the ruling DISY singlehandedly defending the administration’s record.
The results of the 7-month fiscal policy announced this week is an indication that the economy is back on track, with a public sector surplus of 215 mln euros, or 1.2% of GDP, a turnaround from the 91 mln euro shortfall this time last year.
The government claims that these results are even greater when one considers that public sector spending has increased and prudent austerity measures have been introduced since 2012. The claim is that sate revenues are on the up, and this at a faster pace than spending.
Unfortunately, this sugar-coating of the fiscal situation is far from healthy, as the growth rate comes on the back of continued quarters of stagnation, paying the high cost of the bailout imposed in 2012/13. Perhaps the government was eager to exit the ‘economic assistance’ programme, hoping to return to the markets in order to resume borrowing to reschedule and lower its debt. Then again, remaining in the bailout programme would have allowed for serious reforms to be properly introduced and not in a haphazard way, as is at present, with the biggest impact felt in the banking sector, as lenders are still struggling to lower their non-performing loans portfolios.
The expansion of the economy is not as impressive it should be, with the ‘pro business’ administration walking away from its declared policy of privatisations (that would have boosted earnings by 1.4 bln euros and slashed the public sector payroll) and more recently giving in to trade union bullying, that have strong-armed the government into retaining the inflation-based COLA wage system.
Even the three ‘deputy ministries’ that had been promised by President Anastasiades before he was elected, have taken four and a half years to get to parliament, with the new departments not expected to be up and running well into next year. So far, only the Shipping portfolio has been green-lighted, with the Tourism and Development under-ministries still lingering somewhere in the corridors of power.
