Cyprus Finance Minister Vasos Shiarly has stressed the need to take measures in order to face the estimated 1% (or 150-200 million euro) diversion of the fiscal deficit from the target of 2.5% deficit in 2012.
Shiarly announced on Monday that the island’s fiscal deficit in the first three months of 2012 dropped to 0.8% of GDP (140 million euro), compared to 1.8% deficit (310 million euro) in the same period of 2011.
Finance Minister said that “while the expenditures seem to be within the targets of the budget, in the case of the revenues, are slightly out of the budget, which in an annual basis are estimated between 150 and 200 million euro”.
“Some measures need to be taken and our commitment is an intensive discussion with the social partners to take place for the immediate adoption of measures in order to safeguard, with any possible way, the attainment of the targets”, Sharly said reassuring that the fiscal deficit will not exceed the 2.5%.
Sharly said that generally speaking he is in favour of taxation because it does not held the growth of the economy. “This however is the general rule”, he said noting that the implementation of the targets is of great importance since Cyprus wishes to restore its credibility in the markets.
As regards the recapitalization of the Commercial Banks, Sharly assured that the Government is ready to take the needed measures in order to support the banking sector. He added that according to Ministry’s information, it is likely the recapitalization to be around 1,5 billion euro and that only one Bank to need for state assistance.