The surplus of 610 million will give Mr. Keravnos the “air” of movements to start his project with three plus one challenges
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Looking back at the economic program of Mr. Christodoulidis, he had prioritized very high the treatment of accuracy and inflation.
The new Minister of Finance, Mr. Makis Keravnos will take over the portfolio of the Ministry of Finance without having to go through a “grace period”. Yes, he will have the comfort left by the previous “guard”, of the 610 million euro surplus to use properly according to needs, however, with what he will undertake, he will have to manage two plus one procedures almost immediately. It is one of the Ministries on which special weight falls. In the pre-election period, let's not forget that great importance was given to public finances, the financial stability of the country and the economy in general. The economic stability of the country, however, was non-negotiable for all the candidate Presidents, let alone for the Government of Mr. Nikos Christodoulidis who emphasized its importance several times. According to the positions of Mr. Christodoulidis in the pre-election campaign, “the objectives for the economy are achieved through an effective implementation mechanism, which will include correct structures, specific indicators and accountability by competent people, with absolute public interest in mind, in key positions ».
One of the first procedures that the new Minister of Finance will have to handle is, as “K” wrote in its previous editions, the exit to the markets with a sustainable bond. This process is estimated to take place in the very first days of the government of the new Ministry of Finance, and will be a point of reference, since Cyprus has never gone out for borrowing with this type of bond. As the newspaper is informed, the preparation has been done by the previous “guard”, with the exit “file” being ready “on the desk”. The point in time that Mr. Keravnos chooses to give the “ok” to proceed with the debt issuance is in his “hands”. The release schedule, however, is set for March 10-15.
According to the positions of Mr. Christodoulidis in the pre-election campaign, “the goals for the economy are achieved through an effective implementation mechanism”.
The second procedure that the new Ministry of Finance will have to handle will be the adoption of the “mortgage to rent” plan. According to the present information, the Ministry is only a few days away from the final configuration-response from Brussels for its final form. The provisions of the Plan have already been finalized, what remains is for the competent European Authority to give the “green light”. As “K” had written, the response from Brussels will be expected within March and in Cyprus the whole process will then be able to proceed which will help many borrowers to find a way out of their problematic loans. Whether a struggling borrower can apply to enter the Scheme in March or April is of little consequence. What is certain is that the decision will come from abroad within March and the Ministry of Finance under the new management should proceed correctly and quickly in its implementation.
The tail of accuracy
Looking back at the economic program of Mr. Christodoulidis, he had placed very high the issue of dealing with accuracy and inflation. This will also be the “plus one” problem – a process that will have to be tackled by the “good morning” the new Ministry of Finance if he finally follows the programmatic positions that Mr. Christodoulidis had set. According to the program positions, there should be a continuous evaluation of the macroeconomic data and policies of the European Central Bank/Central Bank of Cyprus to ensure price stability, with the aim of formulating the right policies. He should find – as he emphasized in the program positions – targeted financial support for vulnerable groups, depending on developments in the field of inflation, observing fiscal discipline and, at the same time, encouraging discipline in households as well. The program of the new President of the Republic also had positions related to financial literacy, the review of the ATA institution (perhaps this is more related to the Ministry of Labor) and the prevention of profiteering.
The Struggle of Reforms
From the first day that Mr. Keravnos will assume the Ministry, he will be called upon to manage the big “project” of adopting the major reforms imposed by the economic model of “Vision 2035” and the reforms of the Recovery and Resilience Fund. The adoption of the reforms is a road race, a Plan that will need to convince the Parliament and the deputies to adopt specific measures. As far as the Resilience Fund is concerned, Cyprus will be able to receive 1.1 billion euros until 2026 if and as long as it proceeds with the necessary reforms. Until now, Cyprus has received 157 million euros as an advance payment (this is what all states received in September 2021) and then after passing – albeit with a slight delay – the first part of the reforms, it received another 85 million euros. The race involves more than 70 reforms in total, for which there are specific milestones. It is important that there be – as is understood – the appropriate alliances between the Parliament and the Ministry of Finance, so that the necessary reforms that will also release the corresponding funds for the Cypriot democracy can proceed.
The background to the appointment of the Minister of Finance
The face of Mr. Makis Keravnos was in the final “dua” of names that claimed the position. However, until Sunday night, a few hours before the list of Ministers of Mr. Christodoulidis was leaked and subsequently confirmed on the afternoon of Monday, February 27, the economist, Tasos Yasemidis, had also been proposed for Minister of Finance. The member of the Board of Directors of KPMG Cyprus, Mr. T. Yasemidis, was very close to accepting the position of Minister of Finance of the new President of the Republic, however the plans – as it became clear – changed. The “menu” of the Ministry of Finance of Mr. Christodoulidis had several names and Mr. Christodoulidis “knocked” on several doors to find out his final choice. The choice of Mr. Keravnos from economic circles in a first commentary was characterized as safe, emphasizing that Mr. Keravnos has passed through many positions in Cyprus and knows the island's economy very well. It will be a bet – as they commented – if he will manage to play the reforming role that the Cyprus economy now needs in order to perform well.