Expenditure deductions in 2014 state budget will reach 700 million in an attempt to reduce deficit to 0.5 billion euro, Finance Minister Haris Georgiades said on Thursday.

Speaking at the 17th annual conference of Greek and Cypriot organizations abroad, the Minister said that the government seeks to reduce the 2014 state budget by 10% and not exceed 5.5 billion euro in order to bring deficit down to 500 million euro and ensure primary surplus by 2016, which will in effect help Cyprus return to the international markets.

Georgiades said that the government does not intend to impose new taxes, underlining that its policy focuses on cost containment.

“We had excessive borrowing and unsustainable credit expansion and at the same time a state which spent more than it should,” he noted.

He described the adjustment program Cyprus has agreed on with its international lenders (EU Commission, IMF and ECB) as a “very difficult and ambitious” one, stressing however that the government will stick to it.

“We want to limit next year’s budget by more than 10%. This is not easy but this is what we will pursuit, ensuring also stability of tax yields and thereby the prospect of attracting new investments and encouraging entrepreneurship”, the Minister explained, adding that as soon as the government will gain control of public finances and reduce the expenditures it will lower tax burdens.

He also said that the state would make structural changes, such as the new social welfare policy, a new healthcare plan and an “ambitious” reform of the public sector.
Georgiades noted that Cyprus` banking sector stabilises day by day and underlined that the government is trying to facilitate and encourage economic activity and investment.

An ongoing economic crisis has dried up funds. In March, Cyprus secured a 10-billion-euro financing deal from eurozone lenders to stabilise its battered economy.

Under the aid package, Cyprus closed its second largest bank, Laiki Bank, whereas deposits with more than 100,000 euros held at the island’s biggest credit institution, Bank of Cyprus, lost 47.5% of their value, after being converted into bank shares.

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