Cypriot FM says bailout austerity measures to be gradually lifted

Cyprus' Finance Minister Harris Georgiades said on Thursday that austerity measures demanded three years ago by international lenders who pulled the country back from the brink of bankruptcy will be gradually lifted.

Georgiades told the state radio that the slashing by 50 per cent of a tax on immovable property decided on Wednesday by the government is the first step to a wider tax reform.

Property owners paid from between a few euros to several thousands or even tens of thousands of euros for the three previous years as an easy means of collecting over 100 million euros for the state coffers.

Georgiades said that reducing the tax rate from 1 per mille to 0.5 per mille will offset a 19 per cent value added tax (VAT) on property transactions which is a permanent European Union obligation.

Georgiades said other measures in line to be discarded as from 2017 is a yearly extraordinary contribution of 3 per cent calculated on salaries, pensions and income from business.

The Eurogroup and the International Monetary Fund dictated a series of harsh austerity in return for a 10-billion-eruo financial assistance in March 2013. The Minister said that restoring cuts to salaries and pensions which amounted to about 20 per cent will be restored gradually at a later date according to the progress of the economy.

Cyprus achieved a 1.6 growth in 2015 after three consecutive years of recession which slashed GDP by 13 per cent.

Projections by international lenders and rating agencies put growth this year at 2.2 per cent, but the government has revised its own estimate to 2.5 per cent, thanks to an excellent tourist year.

This, Georgiades said, will help reduce unemployment from its current 15 per cent to 13.5 per cent at the end of the year. Endit