President of the Republic Demetris Christofias and President of Democratic Rally, main opposition party, Nicos Anastasiades, achieved a consensus on some of the measures included in the austerity package recently announced by the Finance Minister Kikis Kazamias, aiming to constrain public expenditure and consolidate public finances.

The meeting, which was held early in the morning at the Presidential Palace, was also attended by Finance Minister Kikis Kazamias and Deputy Chairman of Democratic Rally Averof Neophytou.

In statements to the Press after the meeting, Kazamias said that “there is consensus on the measures recently proposed”, expressing the belief deliberations on the measures will be completed by December 8, when he will present the State Budget 2012 to the Parliament and before the voting on the Budget scheduled to take place December 15.

The Minister said that by December 15, all pending issues must be agreed on and Cyprus will send the right messages abroad. The European Commission requests that measures be adopted prior to December 15, to ensure budget deficit reduction below 3% of GDP by 2012.

Democratic Rally leader said that there are convergences on some issues, adding that different views had been expressed on others.

The Cypriot House of Representatives has already approved the first fiscal consolidation package on August 27. A second package of measures is incorporated in the 2012 state budget, as well as a proposal for the increase of VAT from 15 to 17%. If these measures are approved Cyprus will reduce its budget deficit below the Euro area benchmark and particularly to 2.8% of GDP. On Friday, November 18, Finance Minister Kikis Kazamias proposed a third set of measures including the freezing of salary increases in the public sector, (including COLA), for two years a measure that will save 355 million, a scaled taxation of private employees with a monthly salary of 2,500 euro and above and the introduction on a 0.5% levy on the turnover of companies with Cypriot operations for two years.

Cyprus must put in place by December 15 fiscal consolidation measures that would reduce its deficit below the 3% benchmark. Otherwise, the European Commission will impose a fine of 0.2% of GDP.