The MPs asked for the Government's opinion on what the Fiscal Council reports
The Fiscal Council's concerns about the Government's fiscal discipline were highlighted by the deputies of the Finance Committee, during the debate on the supplementary budget submitted by the Government.
The MP of DISY, Haris Georgiadis, of AKEL, Andreas Kavkalias and of the Environmental Movement, Stavros Papadouris, noted their concern about a letter received by the Commission from the Fiscal Council, in which, as they said, it was mentioned that his opinion was ignored, that there is a systematic lack of information, as well as raising concerns and identifying potential risks for the future course of public finances. The MPs asked for the Government's opinion on what the Fiscal Council reports.
Regarding the content of the supplementary budget, it amounts to €361,098,659, with the burden on the fiscal balance amounting to 0.85% of GDP, includes an amount of €116 million of intra-governmental transactions that do not affect the fiscal balance.
The additional needs, according to the report of the bill, concern “social benefits, to strengthen the sectors of health, education, sports, housing for the displaced, strengthening the agricultural sector and various other needs, which arose due to the serious effects that are created in the economy by the war in Ukraine and inflation”.
With regard to the largest expenses, these concern, among others, €60 million for the payment of ATA in the second half of 2023, €60 million for the implementation of co-financed Grant Projects/Plans, €59 million for the purchase of water due to an increase in the cost of desalinated water which is mainly due to the increase in the price of electricity, €56 million for government sponsorship to the University of Cyprus for the implementation of development projects (€42.6 million) but also to cover operating expenses (€13.4 million ), €25.4 million for the purchase of the “Metropolitan” building, where the Ministry of Labor and Social Insurance will be housed, €18.2 million for the extension of the electricity consumption subsidy measure, €15.8 million for state sponsorship to TEPAK for the implementation of the project to build student residences, €15.6 million for hosting displaced persons from Ukraine and unaccompanied minors seeking international protection, €15 million for the purchase of medicines and vaccines against the coronavirus, €11.5 million for the recruitment of temporary staff at all levels of education and €9.4 million for sponsorship to the CMO for the construction/improvement of sports facilities.
MPs said the supplementary budget was only tabled on Thursday and they need time for further consideration, within the time limits set by Parliament closing for summer recess.
Asked about this, the Financial Director of the Department of Budget and Financial Control of the Ministry of Finance, Melina Katsounotou, stated that there is no decision yet regarding the extension of the electricity subsidy plan, however processes are being carried out, based on the data, to continue it. However, it is not included in the supplementary budget for the matter. He stated that, assuming that the extension of the subsidy will be decided, it will be examined whether there are available credits and, if necessary, an additional fund will be requested.
The Chairman of the Committee, MP of DIKO, Chrysis Pantelidis, in his statements after the completion of the committee meeting, stated that as DIKO “we note the €60 million which are included in relation to the implementation of the agreement for ATA, the €7 .5 million for the implementation of the KtiZO project for the reconstruction of the government settlements, which we welcome”, as well as the €18 million related to the electricity subsidy, as he said.
Finally, Mr. Pantelidis noted his concern that the Cypriot state continues to pay a very high amount of money – in this budget it is €15 million – “which are related to the accommodation of unaccompanied children, asylum seekers but and refugees due to the Russian invasion of Ukraine”.
For his part, DISY MP, Haris Georgiadis, said that it is “with particular concern that we are watching the first writing samples in relation to the management of public finances by the new Government”. As he noted, before the elections the Government gave “clear assurances” regarding the observance of fiscal discipline, while in the program of President Christodoulidis there is an explicit reference to enhanced cooperation that his Government would have with the Fiscal Council, as he said. “We are concerned to hear officially from the fiscal council that its opinion is ignored, that there is a systematic lack of information, and at the same time, that this important, independent institution raises concerns and identifies potential risks for the future course of public finances,” he said.
Mr. Georgiadis said that the impact of the Government's moves made in the first 2-3 months will be seen in the future. “We are not going to agree to anything that will return us to the old days, when through thoughtless policies the public finances of our country were derailed,” he said.
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