‘No room for complacency, reforms must be pushed through’

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New Finance Minister Constantinos Petrides warned against complacency regarding the economy as he reaffirmed the government’s commitment to ensure its justice and local administration reform agenda is implemented.

Presenting the 2020 state budget before parliament, on Friday, his first official appearance after taking over three days earlier, Petrides said his ministry will be focussed on bolstering economic growth, reducing unemployment and poverty, while buffering against external risks.

Petrides thanked outgoing Finance Minister Harris Georgiades for the work he has put in, stressing he has set the bar very high.

He noted the Republic of Cyprus, from 2013 until today, has been upgraded from junk status by international credit rating agencies going up 9 notches.

Elaborating on the economy’s performance, Petrides said 2019 is the fifth consecutive year the Cyprus economy has seen a positive growth rate.

He said unemployment has fallen sharply to around 7% of the labour force in 2019 and is projected to decline even further.

He also stated that the poverty rate is at 24% (2018).

For 2020, the minister expects slower GDP growth at 2.9%, from 3.2% this year, and inflation to remain relatively low at 1.2%.

Public debt is expected to fall under 100% of GDP – 97.4% – and continue on a downward trajectory during the year, settling at around 91%.

He also called on MPs to jointly commit to avoiding bad practices of the past.

“The effort has not been completed and there can be no complacency in the economy, as significant external risks are still in place”.

He cited the example of general uncertainty over Brexit and the escalation of trade tensions between large economies, which created a tendency towards protectionism at a time when the global economy is expected to shrink.

“That is why surpluses do not mean satisfying demand and pressure for unreasonable public expenditures,” Petrides said.

He also stressed the need to maintain the stability of the country’s banking system.

He also noted that moves are expected to strengthen tax control and to combat tax evasion.

Petrides made significant reference to the reform of local government and the courts, as well as to the promotion of reform of public sector human resources management.

The Minister also referred to the establishment of a new Independent Supervisory Authority for the Insurance and Provident Funds sector.

There was also a special reference for partial privatisation of state telecoms company Cyta by attracting an investor “before it is too late.”