Cyprus Mail: Press Review in English, 98-06-12

Cyprus Mail: Press Review in English Directory - Previous Article - Next Article

From: The Cyprus Mail at <http://www.cynews.com/>

Friday, June 12, 1998

Economic remedies needed

THE STATE of the economy and the need for remedial measures to control the widening fiscal deficit is gradually becoming a major public issue.

Phileleftheros led with a report about the 'tough' corrective economic measures suggested to the government by the International Monetary Fund (IMF). In a provisional report submitted to the government, the IMF suggested measures to reduce the rate of growth of public spending.

These included the strict implementation of a freeze on public appointments, the scrapping of subsidies and rationalisation of social welfare programmes. To increase revenue, a rises in VAT, the Defence Levy and in charges for government services are all recommended by the IMF.

It also suggested the abolition of the automatic indexing of wages, which leads to wage inflexibility and loss of competitiveness. Indexing was scrapped in most European countries with favourable results, the paper said.

Haravghi accused the Minister of Finance Christodoulos Christodoulou of double standards. At a time when the minister was preaching a wage freeze in the public service and preventing the renewal of collective agreements at semi-governmental organisations, he was taking £2,000 as minister and a £1,500 pension for having served in the public service.

It claimed that Christodoulou had no trouble taking £3,500 a month despite the poor state of public finances. According to calculations, the social insurance fund would soon not be able to make payments, the paper said.

Alithia reported that Syria was demanding $4 million in compensation from the Electricity Authority of Cyprus (EAC) for the latter's failure to honour its contractual obligations with regard to the purchase of 'mazut' petrol for its power stations.

EAC had ordered 100,000 tons of 'mazut' from Syria for 1998, but does not need such a quantity as it has started buying the same fuel from Cyprus Oil Refinery. Syria demands $4 million in compensation for the EAC's failure to honour its contract.

Simerini said that the government was studying ways to find long-term solutions to the rising public service wage bill which absorbs 50.14 per cent (£616,312,000) of the government's annual expenditure.

Ways of making the public service more efficient and more productive are currently the subject of consultations at the presidential palace, the paper said.

Machi quoted the chief of Russia's air force, Anatoly Kornukov, as saying that military planes were ready to bring the S-300 missiles to Cyprus. This underlined Russia's determination to go ahead with the supply of the missiles, the paper said.

© Copyright Cyprus Mail 1998

Cyprus Mail: Press Review in English Directory - Previous Article - Next Article