Cyprus News Agency: News in English, 12-06-01

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From: The Cyprus News Agency at <http://www.cyna.org.cy>

CONTENTS

[01] President: Government policy on economy vindicated

[02] EU Commissioner: Cyprus Presidency puts water high �n its agenda

[03] Australia supports Cyprus' efforts for a solution

[04] Public deficit at 1.33% of GDP in January-April 2012

[01] President: Government policy on economy vindicated

In a televised address on domestic policy, the President also said that dealing with the economic crisis has been the first priority of the government.

"We adopted, right from the start, the approach that dealing with the crisis should be in a balanced way, without unilateral measures. We did not follow the model, that was widely implemented in Europe and elsewhere, of harsh austerity and of stripping down the social state", he said and added that measures were taken after social dialogue. President Christofias said that it was no coincidence that there has been no social upheaval, no long-term strikes and no protests, noting that this is due to the "balanced and, under the circumstance, mild measures the government has taken."

The President explained that the country is faced with deficits not because of its social policies but because of the "dramatic reduction in revenue, due to the economic crisis which has led to changes in fiscal data."

He said that the government followed a policy of supporting development, adding that to this effect the first two economic packages of measures amounted to 0.5 billion euro.

The President quoted three fundamental reasons that have worsened seriously the economy: the worsening of the European economy and in particular the Eurozone, the worsening of the economic crisis in Greece which affected the local economy because of the big exposure of the Cypriot banks to Greek bonds and the "unfortunate explosion at Mari which cost the economy about 1% of the GDP" in addition to loss of human life and difficulties for the people of Cyprus.

"We were never complacent, nor did we remain passive before the challenges and the demands which the unstable and negative global economic environment creates," he said.

Replying to a question on the possibility to resort to the European Financial Stability Mechanism, President Christofias said that it is not certain that Cyprus will need to apply to the Stability Mechanism. However, he did not rule out that Cyprus might have to do just that.

He also referred to statements made by the Central Bank Governor Panikos Demetriades that the Cyprus tax system is a red line for the country. "Nobody, but nobody can force us to change our tax regime," he said.

He described the rise in unemployment as "the most significant repercussion of the economic crisis", saying that the number of unemployed reached 37,440, 30% of whom are non Cypriot.

The President said the government has taken specific measures to combat unemployment, such as helping the unemployed to join the working ranks and to improve the monitoring of the labour market to curb undeclared work.

The President fended off criticism from the opposition, saying that the government has achieved a lot, under "extremely difficult international circumstances, which have been caused, are maintained and are reproduced by the unprecedented economic crisis which has plagued the globe and in particular Europe."

Referring to the energy sector, President Christofias stressed that "it would not be an exaggeration to say that the discovery of natural gas deposits is the most important positive development in our country's recent history," adding that government policy on the matter has proved to be very effective in dealing with Turkey's provocative moves and reaction and has rallied together, on the side of the government, the entire international community.

In addition, President Christofias said that the government is proceeding with a long term strategic plan that includes all the aspects of the energy sector.

President Christofias was critical of the Central Bank, saying that it did not exercise its supervisory role as it should have done and allowed banks to expose themselves to risks. The banks also, he pointed out, bear a share of responsibility in terms of exposure to Greek bonds.

Responding to a question on last year's deadly blast at a naval base, which killed 13 persons and destroyed the island's main power plant, the President said that he does not feel guilty about the blast.

He reiterated that he feels deeply sorry for the death of thirteen persons. He stressed that the loss of human life was not his fault and added that he will express his position on the blast in the future.

Christofias said that the findings of the police, which are based on testimonies of people who were present at the blast, are completely different than the findings of the investigative commission he had set up (the Polyviou commission). He also referred to a statement made by Attorney General Petros Clerides that the President of the Republic does not bear any criminal responsibility.

In another question, President Christofias noted that his decision not to run for a second term has nothing to do with the deadly blast and the criticism he has come under.

Referring to achievements during his term in office so far, he said the government has solved the water shortage problem, has secured the viability of the social security fund until 2048, it is in the process of resolving the pension scheme of the civil service, it has spent millions to improve the road network, introduced radical changes in the educational system and provided 150 m. euro per annum for the housing needs of refugees.

He also referred to three private universities, accredited by the Ministry of Education, to promoting local administration, implementing a well-rounded policy on the environment, including waste management and promoting the general health scheme.

In his opening remarks, the President did not fail to reiterate his firm determination to work for a political settlement in Cyprus, if the Turkish and the Turkish Cypriot side wishes to do the same or if it displays good will.

[02] EU Commissioner: Cyprus Presidency puts water high �n its agenda

He noted that the Directorate General for the Environment is ``putting a lot of attention on water,`` adding that Cyprus has ``strong knowledge`` on the issue. Potocnik also pointed out that, due to geological reasons and its geographical position, Cyprus should put water under its attention, as well as the issue of waste.

Recalling that the Commission has adopted an innovation pack on water efficiency, Potocnik expressed hope that the issue of water will be included in the conclusions of the EU Environment Ministers Council in December. Potocnik referred to other issues on the agenda such as the 7th Environment Action Programme, the environmental impact assessment directive, priority the substances in the marine Life regulations, the numerous international meetings and the informal Council, during which the issue of water will be discussed.

The EU Commissioner also referred to the discussion of crisis response and resource efficiency. ``I think it is pretty clear why, because we are more and more learning that many of our recourses are limited, we are aware that Europe in pretty much import-depended when it comes to many of the resources and we are seeing that the prices of many of the resources are going high``, he explained.

[03] Australia supports Cyprus' efforts for a solution

"Your solidarity towards Cyprus has been expressed over the years through the hosting in your country of the second largest Cypriot community abroad", President Christofias said in his toast and thanked Bryce for the continuous participation of Australia in the United Nations Peacekeeping Force in Cyprus. "As a token of our appreciation for Australia's contribution, Cyprus will contribute the symbolic amount of 20,000 euro to your initiative to build a monument in honour of Australians participating in peacekeeping missions," he added.

Christofias pointed out that despite the difficulties and problems created by Turkey's stance, "we remain committed to the talks process under the auspices of the United Nations, and to pursuing a solution of a bi-zonal, bi-communal federation with a single sovereignty, a single citizenship and a single international personality, with political equality as defined by United Nations resolutions. We will not deviate (from our vision) because of difficulties and obstacles. Our vision is and will remain a united and peaceful Cyprus, a common homeland to all its legal residents".

[04] Public deficit at 1.33% of GDP in January-April 2012

According to the General Government's accounts published by the Ministry of Finance on Friday, income was increased by 6.68% (128 mln euro) reaching 2.03 billion euro, whereas expenditure were marginally reduced by 0.81% (18.8 mln euro) to 2.30 billion euro. In April, public deficit went up by 105.57 million euro, while in the first quarter of the current year it stood only at 136.28 mln euro or 0.75% of GDP. In 2011, public deficit reached 6.01% of GDP (1.08 billion euro). The Ministry of Finance has pledged to reduce the deficit to 2.5% in 2012.

Tax revenue significantly increased by 7.12% to 1.81 billion euro in the first four months of 2012 compared to the corresponding period of the previous year. This was mainly due to a whopping 18.22% rise of direct taxes that climbed to 639.20 million euro, while indirect taxes increased by the moderate percentage of 2.40%, reaching 827.15 million euro compared to last year. Income tax revenues recorded an increase of 17.56% and climbed to 351.77 million euro compared to 299.22 million euro in the first four months of 2011. Income from indirect taxation (imports levy, consumer taxes, VAT and other) were increased by 2.4% to 827.15 mln euro.

Consumer taxes paid only 200.96 mln in January-April 2012, recording a decrease of 1.96% compared with the first months of 2011. Current expenditure were increased by 0.32% to 2.21 billion euro compared with the same period of 2011, while expenditure for wages and daily wages were reduced on a y/y base by 0.69% to 591.91 million euro.

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