Akamas compensation guidelines poses risks, says Finance Minister

Kathimerini.com.cy

"The guidelines for compensating landowners in Akamas for the loss of land value they have incurred and providing assistance to the neighborhood are speculative and ill-defined. More importantly, they have no cost estimate at all, which poses serious risks because adopting them would put an excessive strain on the public purse that would be difficult to pay for,"  the Minister of Finance said in a statement on the Akamas compensation measures.

The statement in detail

I must make the following clarification in light of today's printed press articles and media reports referring to the guidelines for creating a framework of compensatory measures for Akamas, as suggested by the Ministry of Agriculture, Rural Development, and Environment, pending the release of the Akamas Local Plan:

The rules for compensating landowners in Akamas for the loss of land value they have incurred and providing assistance to the neighborhood are hypothetical and ill-defined. More importantly, they have no cost estimate at all, which poses serious risks because their adoption would put an excessive burden on the public purse that would be difficult to pay for.

In particular:

1. Payment of compensation for the potential loss of private real estate development, including the exchange of private real estate for public real estate, is fraught with legal difficulties and would by definition place an excessive burden on the fiscal balance, with all the ramifications that follow for the prospects of the Cypriot economy and its credit rating.

2. It sets a precedent for similar types of requests by other affected owners.

3. It raises the issue of equal treatment from other affected parties in other Natura sites, 'white zones', but it also raises serious political issues such as compensation for the refugee community.

4. In addition to significant legal issues, the creation of a Green Fund as proposed lacks adequate funding for compensation. When used in developed nations, specific resources are made available, such as the Urban Upgrading Fee collected from those who are favorably affected by developments resulting from Local Plan projects or taxes on vacant property in Development Zones. This is a model that could be used in all of Cyprus because it is based on the idea of "redistribution" of wealth from the privileged to the underprivileged. As finance minister, I brought up these concerns, but the proposals weren't adopted, possibly due to political costs. 

In light of the aforementioned, I feel that such proposals should be seriously considered and studied with regard to an outdated topic. The so-called "compensation framework" might be adopted, but its failure to be put into effect in the future due to significant issues, as it was under other governments, might also be seen as a political joke by the locals.

In conclusion, I was unable to approve of a framework of unfunded compensation measures that was put forth a few days before the Government's departure in an effort to deal with opposition, jeopardizing the sustainability and macroeconomic stability of the economy. This is because my primary responsibility as Minister of Finance is to ensure the sustainability of public finances in accordance with constitutional provisions and other legislative provisions.