DISY leader targets public sector

FISCAL consolidation and boosting growth are not conflicting objectives, DISY chief and presidential hopeful Nicos Anastasiades said yesterday, as he outlined his proposals on the economy, which include cutting the size of the civil service and looking into privatising state companies.

“They are the two sides of the same coin … the same parallel direction we must consistently follow to regain our credibility and access to international capital markets but also to reverse the vicious cycle of recession and unemployment,” the DISY leader said.

To achieve fiscal consolidation - the main pylon of the new economic policy - the state must be disciplined, have balanced budgets and must draft a mid-term fiscal framework.

Supplementary budgets - a common practice in Cyprus - would only be allowed in exceptional cases and implementation of the budget would be reviewed every quarter to catch and correct any deviations in time, Anastasiades said.

“In this way we will create the structures for a viable economic policy that will allow us to finance our basic needs without counting on the guardianship of third parties and without mortgaging the future of our children through uncontrolled borrowing,” he said.

A necessary precondition for fiscal consolidation would be the gradual reduction of the size of the civil service, Anastasiades said.

In a report last year, the IMF said Cyprus needed to contain a public sector wage bill which, at 15.4 per cent of GDP, was the highest in the eurozone.

“We should never get to the point of cutting development needs or social welfare to maintain a bloated state apparatus,” he said.

Anastasiades also appeared ready to tackle the thorny issue of extending the retirement age, something, which the European Commission recommended.

“Through dialogue, we must find acceptable ways of implementing the European recommendation to link the retirement age with life expectancy,” he said.

He also pledged to better-manage the social insurance fund, which has been raided at various times by successive administrations.

It is understood that the government owes the fund some €7.0 billion.

“We can no longer have the state use these funds as a source of cheap borrowing,” he said.

And he pledged to review the state’s involvement in business activities and consider the possibility of selling parts of public companies or fully privatising them.

“Our main position of principle is that the state must have the role of the regulator and not the entrepreneur.”

To enrich the island’s tourist product, the DISY leader said it was his immediate priority to licence a number of casinos, which along with other projects, would fetch the state tax revenues.

The current administration has refused to issue casino licences on ideological grounds, seemingly ignoring the fact that online casinos are found in abundance and traditional ones operate in the Turkish Cypriot breakaway state.