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Cyprus Internet Directory [ Our View: Can we take anything the government says about the economy seriously? ]

Our View: Can we take anything the government says about the economy seriously?

FINANCE Minister Charilaos Stavrakis suspected there was an orchestrated attempt by opposition politicians to paint a very bleak picture of the economy in order to secure an electoral benefit. This caused great harm to the economy, he said didactically, as he reproached critics for using an internal finance ministry document in order to score political points.

The document, which envisaged the budget deficit reaching six per cent instead of the forecasted four per cent, was simply making a ‘worst-case scenario assessment’ claimed Stavrakis adding that this was just “one of many such exercises that the finance ministry conducts.” This was, apparently, the “most extreme and pessimistic scenario” examined by the ministry technocrats.

Nobody has reason to doubt the minister, but the problem is that the possibility that we will be faced with worst-case scenario by the end of the year cannot be ruled out. After persistent press reports that the deficit for the first quarter of 2011was in the region of 1.6 per cent of GDP instead of the 0.4 per cent forecasted by the government, Stavrakis confirmed the news yesterday.

For the corresponding quarter last year it was 0.6 per cent and the deficit for the year was 5.3 per cent of GDP. How would the four per cent deficit forecast for this year, be achieved?  Only last week, the Governor of the Central Bank pointed out that figures for the first quarter of this year were disappointing and made achieving the budget targets for 2011 doubtful. A perfectly legitimate point, given that the deficit for the first quarter is almost three times as high as it was last year.

A plausible explanation, which does not inspire any confidence in the government, for the high deficit was offered by DIKO deputy Nicholas Papadopoulos who accused Stavrakis of “creative accounting”. He said that state expenditures for 2010 were entered in 2011, thus reducing last year’s deficit, but drastically increasing the first quarter’s deficit of this. The minister tried to deny this by claiming there were one-off payments made in the first quarter, but he was far from convincing, raising serious questions about the government’s trustworthiness.

Can we take anything the government says about the economy seriously? Stavrakis and the President never tire of telling us that for the first time ever the number of civil servants had been reduced, by a thousand. Yet the figures released by the Statistics Service last week showed that the number of civil servants had increased, from 2009 to 2010, by more than one thousand.

Under the circumstances, the finance ministry officials were not wasting their time in making a worst-case scenario assessment. The way the government is managing the economy it is becoming increasingly to believe it could be avoided.

(Source: Cyprus Mail)
Copyright © Cyprus Mail 2008 Please contact Cyprus Mail for the copyright terms of this article.

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