Cyprus’ government reaffirmed its commitment to “modernise” the state by pushing through a package of reforms which include speedier justice and less bureaucracy.
President Nicos Anastasiades wants to carry out the reform programme as a priority and is asking both his associates and the leaders of the political parties, with whom he has recently launched a series of contacts, to work collectively on the matter.
Anastasiades' consultations with the political party leaders is to continue over the coming days focusing on justice and investment policies.
Government spokesperson Prodromos Prodromou said the government wants to “offer citizens and the society faster, thus more effective, administration of justice, a better and more effective public service, in order to take advantage of a huge investment that taxpayers make in human capital”.
Finance Minister Harris Georgiades reaffirmed the government’s intentions while presenting the State Budget for 2020 before the House Finance Committee on Tuesday.
Georgiades told MPs that the government is focusing on reforms aiming to enhance the effectiveness of the public sector and services provided by local authorities and the justice system.
He said the administration’s reform plans also include the creation of a Deputy Ministry for Innovation and Digitalisation.
Georgiades said the agenda also includes the privatisation of the state Lottery, the Cyprus Stock Exchange and the Cyprus Telecommunications Authority.
According to comments accompanying the 2020 budget, the state is to see revenues of €10 bln and expenditures of €9.4 bln.
Estimates on which the budget is based is a GDP growth rate of 3.2% for 2019, 2.9% for 2020 and 2.7% for the years 2021-2022.
Unemployment is also projected at 7% in 2019, 6% in 2020, 5.5% in 2021 and 5% in 2022.
It is also estimated that inflation will reach 0.5% in 2019, 1.2% in 2020 and 1.5% in the two years 2021 – 2022.
In addition, public debt is projected to rise to 97.4% of GDP in 2019 and 91.1% in 2020.
Possible risks
The budget lists five sources of risk that may have a negative impact on the economy.
-Court cases pending before the justice system challenging austerity measures and haircuts on deposits imposed during the crisis years, with the most predominant threat being an administration court decision rendering cuts on civil servants and pensions as unconstitutional, a decision the government challenged at the Supreme Court.
Georgiades said that the outcome of judicial cuts in the public sector is "extremely important for fiscal stability,” noting that a ruling reaffirming the first instance court decision will cost the state some €900 mln.
-The ongoing challenges facing the banking sector due to the high rate of non-performing loans.
– Possible slowdown in the reform procedure or relaxation of the fiscal policy.
– Contingent liabilities arising from government guarantees.
-External risks related to the volatile economic environment in the EU, the euro area and the US, the negative impact a no-deal Brexit could have on the Cypriot economy.
