Speaking here Wednesday, after a Cabinet meeting and commenting on a decision, taken by the EU Economic and Financial Affairs Council (ECOFIN), to begin an excessive deficit procedure for Cyprus, Stephanou pointed out that the Republic of Cyprus is at the first stage of this procedure.
“We are at the stage of the recommendations, we are taking into account these recommendations and we are also taking measures”, he said, noting that in other EU countries like Greece tough measures were imposed on them.
The Spokesman assured that the government will continue to implement its policy in order to achieve the targets that have been set by the EU, to bring the budget deficit below 3% of the GDP by 2012.
Stephanou pointed out that the reason that ECOFIN decided to begin an excessive deficit procedure for Cyprus is because of the global economic crisis and external factors. The EU notes that Cyprus, like other EU members, has given money to boost the economy and encourage growth, he added.
The Spokesman stressed that in the case of Cyprus and Denmark, the EU recognises that the deficit is the result of external factors, and asks these countries to reduce their deficit in a medium term period, by the end of 2012. On the other hand, he noted, the EU asks Bulgaria and Finland to bring their deficit below 3% immediately, within 2011.
Asked whether the government is considering an increase in Value Added Tax (VAT) on companies and real estate, Stephanou clarified that at the moment nothing can be said for sure.
“We will discuss the matter and consult on how we can increase the state revenue in a socially fair way. At the same time, we continue our effort with the measures we have adopted, in order to have results”, he said recalling that the bills on tax evasion are still pending before the House.
The EU Economic and Financial Affairs Council (ECOFIN) decided Tuesday to begin an excessive deficit procedure for Cyprus, Finland, Bulgaria and Denmark.
ECOFIN said that 2012 is the Cypriot government’s deadline to bring the budget deficit below 3% of GDP. According to the data given by the Cypriot authorities in April, Cyprus’ deficit reached 6.1% of GDP in 2009.
ECOFIN urged Cyprus to limit its deficit to 6% by the end of 2010 and then reduce it by 1,5% of GDP yearly until it reaches below 3% in 2012 the latest.
Financial Mirror, July 15, 2010