Cyprus will be faced with the spectrum of default in case of non-voting of the state budget and consequent downgrading of its creditworthiness below the investment category, said the Minister of Finance Konstantinos Petridis, adding that without the support of the economy through the economy possibly “to mourn on scorched earth.”
“Apart from the fact that the money cannot be given (to support the economy) we may mourn on the scorched earth because we are going through the 11th month of the pandemic and the resilience of the private economy has reached its nadir,” said Mr. Petridis.
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The possibility of stopping payments is visible
Speaking before the committee, Mr. Petridis said a budget vote could lead to a suspension of payments.
“Apart from not being able to give the money (to support the economy) we may be mourning on scorched earth because we are in the 11th month of the pandemic and the resilience of the private economy has reached its nadir,” he said.
Regarding the possibility of a delay in payments, he explained that there are debts amounting to a few billion that are expiring and will have to be repaid, and added that there will be a problem in case of loss of access to markets.
“If there is no possibility of borrowing, we may be led to a stoppage of payments. “We secured liquidity in March and April (2020) but this liquidity needs to be renewed,” he said.
Regarding the upcoming rating by Moody's, which is scheduled for January 22, Mr. Petridis explained that it is one thing to downgrade a country with an AAA rating and another to downgrade a country that is one step above the investment category.
Saying that this house is one of the strictest, the Ministry of Finance pointed out that “nothing is specified with the voting of the budget but certainly with the non-voting it is specified”.
Informing the committee, Mr. Petridis said that the revised budget shows an increase in expenditures by € 339.9 million, of which € 220 million relate to dealing with the consequences of the pandemic. He noted that the revised budget incorporated 27 of the 36 amendments approved by the parliamentary parties in the initial budget vote, which include cuts in specific expenditures of € 21.3 million.
Mr. Petridis said that in the budget were included as a broader policy framework issues such as the start of the social dialogue for the introduction of the minimum wage, the minimum pension, retirement at 63rd for heavy occupations without actuarial reduction (12% penalty) after completion actuarial study, as well as the preparation of how to support borrowers deemed unsustainable.
Liquidity for 3rd wave treatment
Asked how to deal with a possible third wave of the pandemic, Mr. Petridis referred to the strategy to deal with the first wave, namely the issuance of debt to create fluids to support the economy, which, he said, was welcomed by the European Commission and rating agencies.
“We did not waste liquidity immediately to have stocks to support the second wave and this is proven by the facts. These stocks allowed us to announce € 350 million due to the lockdown in January, which could not have been foreseen. “Based on this philosophy, we should continue to ensure that we have the fluids available if there is a third or fourth wave,” he said, adding: “The point is to have the liquidity that will allow us, if not bad, for a third wave to support economy and this can be done if we have a budget and if we are in the investment stage “.
Macroeconomic estimates “towards the downside scenario”
Asked by AKEL that the 2021 budget is based on an assumption for growth of 4.5% and whether this scenario will be realized due to the continuation of the pandemic, Mr. Petridis said that so far the real economy was going better than forecast and brought as an example the real forecast for a 7% contraction in 2020, while subsequently revised to 5.5%.
Saying that the next revision is in March and that there is great uncertainty in the forecasts due to the pandemic, the Ministry of Foreign Affairs acknowledged, however, that “of course when you have a month, then the assessment is towards the downward scenario”.
“If there are three months left, what prediction will you make?” “We are right in our estimates, but it is not a panacea, it is a panacea to be able to support economic policy,” he said.
Regarding the public debt, YPOIK said that it does not believe that there will be a deviation from the initial forecasts. “The goal is to get back on track in 2021,” he said, noting that about one-sixth of the debt issued in 2020 remains liquidity to deal with the pandemic and debt repayments.
Regarding the issue of granting state guarantees for granting loans to companies and the self-employed, Mr. Petridis said that the parties will receive a letter within days regarding the government's proposals on the issue.
Answering a question about the support of those borrowers who will not be considered viable by the Estia project, Mr. Petridis analyzed the way in which they will be supported in order to maintain their main residence, explaining that the new sub-plan has not been announced yet, such as characterized, since not all data are available.
In particular, he said that according to the data, 543 applications were deemed unsustainable out of the 5,176 applications received by the Ministry of Labor. As he said, for these borrowers the support will be divided into three categories. As he said in the first category are the borrowers who will become viable with greater debt relief from the banks, in the second concern those who will become viable after greater impairment by the banks and increased contribution from the state and the third category concerns borrowers with much low income that will require a much larger contribution from the state. Meanwhile, an official of the Ministry of Finance said that the number of unsustainable borrowers is estimated to increase close to 2,000 after the examination of all applications is completed.
Intensity with DIKO
YPOIK spoke of jokes and ironies when the Chairman of the committee, Deputy Chairman of DIKO Christiana Erotokritou spoke about the “Asia Minor catastrophe” when the Minister was asked about the consequences of a new budget rejection. “It is certainly not a joke that we are going through and we must all stand up to the seriousness of the situation without jokes and irony,” he said.
Besides, responding to the remark of the President of DIKO that it is the arrogance of the government that led to the non-voting of the budget, Mr. Petridis replied that “I could talk about arrogance and keep the characterizations for yourself”.
Υπ. Labor: Increased amounts to avoid a dramatic rise in unemployment
The Minister of Labor, Welfare and Social Insurance, Zeta Aimilianidou, said that the support plans for the workers, after the imposition of the January bill, were modified and increased to € 130 million, compared to € 24 million in November and € 40 million in December. 2020.
“The new plans are exactly € 130 million with the aim of preventing unemployment from reaching dramatic rates,” he said, adding that with the approval of the budget by the end of the month, support will be paid to those affected by the pandemic.
Regarding the policy intention for retirement at the age of 63 for heavy occupations without the actuarial reduction of 12%, Ms. Aimilianidou said that this will be done after the actuarial studies “so as not to affect the viability of the social security fund.
“We will come up with a bill upon completion of the study,” he said.
In statements after the session, Christiana Erotokritou criticized the government for insisting on continuing the uncertainty by not giving the copies of the naturalization files to the Audit Office, while adding that if the files are not given, DIKO will vote against the revised budget.
DIKO is not compatible with its principles. “Since the government insists on not handing over the files to the Audit Office, DIKO will not vote for the budgets,” he said.
DISY MP Onoufrios Koullas said that the revised budget now includes new support measures and policies to support vulnerable groups as well as planning for projects that will be done by raising European funds.
“For all these reasons and in these very difficult conditions we live in, the voting of the state budget is imperative”, he said and called on everyone “to show responsibility, seeing first and foremost the good of our country”.
The Representative of AKEL, Stefanos Stefanou said that the revised budget has not changed in terms of its philosophy, while the forecasts on which it has been built have not changed and are out of the real data.
Saying that AKEL will study the budget and will present its concerns during the debate in Plenary, Mr. Stefanou added that “we are divided by our perception of socio-economic policy and that is why we are voting against the budget over time.”
On behalf of EDEK, Elena Kozakou Lymbouri said that the Movement requested clarifications from the government on the issues raised by EDEK. “The Movement will wait to receive the final answers from the government on the pending proposals so that the political bureau can make the final decisions on the state budget,” he said.
Michalis Giorgallas, on behalf of Solidarity, expressed satisfaction with the inclusion of the amendments tabled by the party during the discussion in the initial budget.
“We have started the process of budget analysis and we will be guided solely by the public interest,” he said.
On behalf of the Cooperation of Democratic Forces, Angelos Votsis underlined the “enormous importance”, as he said of making any decision on the budget. “If this is to be approved, it should have been done yesterday as soon as possible in order to eliminate any risk of degradation. If, on the other hand, the decision is negative, the state will have to prepare to face the most serious problems that will arise with twelve “.
Environmentalist George Perdikis, speaking before the committee, said that “it would be an oxymoron to vote on a budget that includes projects with which we are in direct opposition”, although he described as positive that the revised budget also included measures to support the economy and workers. .
The head of the Citizens' Alliance, George Lillikas, said that the budget as it has been revised has acquired a more human face, while noting that the government has indeed pursued an expansionary policy with support measures that will leave fewer social problems.
Philenews / ΚΥΠΕ