Minister of Finance Charilaos Stavrakis has expressed conviction that Cyprus would fulfill its short- term fiscal goals.
Stavarkis told journalists Wednesday that Cyprus’ fiscal deficit for 2010 is expected to reach, based on moderate calculations of the EU, 5,5%. He added that according to the Cypriot Ministry’s calculations, it reaches 4,9%.
The Minister held a meeting Wednesday with a delegation of the Moody’s credit rating agency, to whom he analyzed Cyprus’ current economic situation, public finances and economic prospects. Stavarkis presented his financial analysis to journalists as well.
He said that fiscal deficit has dropped due to fact that the increase of state salaries reached only 1,7%, following the reduction of the number of public servants by 1040 employees.
Referring to 2011, he said that the aim is to limit fiscal deficit under 4%, compared to the aim of 4,5% set by the European Commission. He also presented a scenario showing that the fiscal deficit could even drop to 3,3%.
Stavrakis pointed out that the 2011 budget provides for an increase in expenses by 0,4% or 30 million euro, while, according to moderate estimations, revenue could reach 2% of GDP, or 120 million euro.
“The deficit, without the measures we have taken, and due to the tight budget, is reduced to 4,3%. We have taken measures amounting to 175 million euro (1% of GDP) so 4,3% should be reduced next year to 3,3%”, he went on to say.
Moreover, Stavrakis said that total needs for refinancing public debt, which expires in 2011, reach 10% of GDP, or 1,75 billion euro, adding that Cyprus could issue bonds for the domestic market, or a bond of one billion euro for the international markets.
Public debt for 2010 reaches, according to the Minister, 60,6%, adding that this is 1,6% lower than the European Commission’s estimations, which rose it to 62,2% of GDP.
Referring to international rating agencies, he said that they seem to be convinced that Cyprus will fulfill its fiscal goals, but they concentrate on Cyprus’ banks and their exposure to Greece, as well as structural problems and competitiveness of the island’s economy.
“We have convinced them and already the two rating agencies, Moody’s
and S&P seem to be convinced that we can fulfill our short – term fiscal goals”, the Minister stressed.
Stavrakis told journalists that Moody's is expected to publish its decision soon, while Fitch ratings will make its decision public in May.
Regarding growth rate, he said that based on the Ministry’s estimations, it will reach 1,5% in 2011, in comparison to an estimation of 1,8% of the IMF and the Central Bank.
