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Roundup: Eurogroup allows Cyprus to proceed with budget approval

Xinhua, December 6, 2016 Adjust font size:

The Eurogroup has given the go ahead to Cyprus to approve its 2017 budget despite reservations that it will be outside the draft budgetary plans laid down to safeguard fiscal discipline by Eurozone member countries, Finance Minister Harris Georgiades said on Tuesday.

His comments were made after the Eurogroup and the European Commission urged Cyprus on Monday to adopt "significant additional measures" to meet its medium term budgetary objectives.

The Eurogroup decided on Monday that bailed-out Cyprus, along with Germany, Ireland, the Netherlands, Austria, Slovenia and Malta, is consistent with debt rule compliance, but at the same time adopted an earlier assessment that Cyprus's budget will end with a 1.4 percent deficit, well above the required balance of nil deficit.

Georgiades told the state television that he insists on his own ministry's projections of a negligible deficit, adding that he assured his Eurogroup colleagues that additional measure will be taken if their projections prove to be correct.

Eurogroup President Jeroen Dijsselbloem said that "these measures will be asked only if the situation of a structural deviation arises."

His comments were endorsed by European Commissioner for Economic and Financial Affairs, Taxation and Customs, Pierre Moscovici.

"That means that the Eurogroup actually told us that we can go ahead with the approval of the 2017 budget as originally drafted without any amendments in the form of additional revenue or expenditure cuts," Georgiades said.

The Eurogroup recommendations came as the Cypriot parliament started a three day debate on the budget on Monday.

It is expected to be passed by a majority in the 56-member chamber on Wednesday as three parties, ruling DISY, opposition DIKO and Citizens Alliance parties, commanding 30 seats, said that they will vote for the budget.

Left wing opposition AKEL party said it will vote against the budget.

A budget summary said that revenue is expected to reach 6.964 billion euros(7.48 billion U.S. dollars), with the expenditure estimated at 7.06 billion euros, leaving a deficit of just 96,000 euros.

Cyprus exited with flying colors a three-year program of economic adjustment after a 10-billion-euro bailout in March 2013.

Georgiades has said that any deficit in the budget will be covered by additional revenue as the actual growth of the economy at the end of this year is expected to be 3.0 percent, compared with earlier projections of 2.7 percent. Endit