There is no economic bubble says Finance Minister

Cyprus economy growth rate is expected to exceed 3% in the next three years, Minister of Finance Harris Georgiades told the members of the House Committee on Financial and Budgetary Affairs on Monday.

He stressed that the State from now on needs to focus on tertiary education, which has a contribution to the GDP approaching that of the shipping sector, as well as on research and innovation.

He also rejected claims that the economy showed signs of a bubble. Presenting the 2019 State Budget to the MPs, the Minister noted that the state budget remains balanced and that any surpluses would be used to reduce public debt. “This is the basic principle, this is our policy and we continue with that,” he underlined.

He said that the public debt is expected to increase to 104% of the GDP, despite estimates for 110%, as a result of Government moves to support the transaction for the sale of the Co-op bank, while in 2019 the public debt would fall to 97%.

Georgiades told the MPs that the government plans to continue its policy of no tax-rise.

He also said that the government plans to abolish the stamp duty, alter road tax, eliminate fuel tax and reduce tax imposed on interest paid as a special contribution for the defence from 30% to 17%.

An economy that grows for the third consecutive year with a growth rate exceeding 4% should aim at encouraging savings, he noted.

Georgiades added that a public consultation would start very soon on rendering the submission of tax declaration obligatory irrespective of income, “to close any window of tax evasion”.

“Before you, lies a budget with no deficits, no exaggerations, without the mistakes of the past, for which we have paid, with a prudent increase in spending that allows us to fulfill our program, our needs, new projects and policies and with an equally prudent tax reduction. That is, a budget proposal that secures stability and safety and I call upon you to approve it after you will have examined it”, he told MPs.

The Minister rejected claims that there was an economic bubble, saying that the economy “presented all the opposite features of an economic bubble”, but noted that the sales of high-value property would have to be monitored.

Georgiades said that social housing is included in the government planning and would be promoted by the Interior Ministry.