Cypriot Finance Minister Charilaos Stavrakis appeared on Friday satisfied over the forecasts released by the European Commission and on Thursday by the International Monetary Fund especially concerning growth rate, adding that figures concerning Cyprus` budget deficit, which seem to deviate from the target of 4.5% for 2011, are “fully manageable.“
The European Commission released Friday its spring forecasts, according to which the Cypriot economy will grow in 2011 with a rate of 1.5% of GDP, whereas the figures released Thursday by the IMF project a growth rate of 1.7%.
According to Stavrakis, the Commission and the IMF project a further acceleration of the economy in 2012 reaching a growth rate of 2.2% and 2.4% respectively, whereas the Commission projects a reduction of the unemployment in Cyprus.
According to the EU estimates, unemployment will reach 6.3% in 2011 and decline to 5.6% the following year.
With regard to Cyprus` budget deficit, Stavrakis said that the forecast of the Commission project a shortfall of 5.1%, which is above of the 4.5% target set out by the Commission, whereas the respective estimate of the IMF projects a 4.5% deficit, which coincides with the target assumed by the Ministry.
According to the Commission estimates, Cyprus budget deficit in 2012 will decline to 4.9% of GDP as opposed to the 3% target, whereas the IMF figures project a 3.7% deficit.
“The figures for the deficit are fully manageable,“ Stavrakis said, adding that “with the continued effort to contain state expenditure we will achieve our targets this year,“.
Stavrakis said the forecasts issued both by the Commission and the IMF deny “the extreme scenarios for the economy projected by the opposition for a 6% deficit and an unemployment of 8%.“
Concerning the public debt, Stavrakis pointed out the “extremely fragile“ external environment and the difficulties facing some Euro area member-states to secure the necessary funds for covering their financial needs, stressing that “as a precaution the government has borrowed from abroad and the local market with very competitive interest rates.“
“At present we have created a reserve of 780 million euro in cash and bank deposits, creating a protective shield for the Cypriot economy in the theoretical case of problems in other Euro area member-states,“ he said.
Concluding, Stavrakis said that the government “is fully aware of the challenges and continues to work seriously for the support of development and the common welfare of all.“