EU Finance Commissioners Pierre Moscovici and Valdis Dombrovskis jointly asked Cyprus Finance Minister Harris Georgiades to explain his views on the medium-term objective for a 2017 balanced budget on structural terms, reported CNA English on Tuesday night.
“A preliminary assessment of the DBP suggests that Cyprus plans to depart significantly from its medium-term objective of a balanced budget in structural terms in 2017,” read Moscovici’s and Dombrovskis’ joint letter to Georgiades.
“The structural balance is expected to deteriorate by 1.9 pp GDP compared to 2016. The recalculated structural position is expected to deteriorate from a surplus 1.5 per cent GDP in 2015 to a deficit of -0.1 per cent GDP in 2016 and further to -2 per cent GDP in 2017,” it added.
“While it is true that the output gap estimates derived from the commonly agreed methodology are subject to uncertainty for Cyprus, there seems to be a number of measures that lead to a significant relaxation of the fiscal stance,” read the joint letter.
“… We are writing to consult you on the reasons why Cyprus plans a change in the structural balance in 2017 which is well below the requirements of the preventive arm of the Stability and Growth Pact,” it noted.
Concluding, the joint letter added: “The Commission seeks to continue a constructive dialogue with Cyprus in order to come to a final assessment.
“We would welcome your views by October 27, 2016… to allow the Commission to take these into account in its further analysis. Our services stand ready to assist you in this process.”
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