Cyprus has the highest fiscal flexibility among 28 European states
Nicosia, Jun 30- The Cypriot Ministry of Finance, expresses satisfaction over the recent report of Standard and Poor's entitled ''The 2006 fiscal flexibility index'', in which Cyprus ranks first.
According to a press release issued by the Ministry, Cyprus ranks first regarding the highest degree of fiscal flexibility among 28 European states (25 member states, Norway, Iceland, Switzerland).
Cyprus is followed by Switzerland and Ireland.
''While Cyprus leads marginally thanks to the high degree of revenue flexibility afforded by its exceptionally low rate tax rate regime, flexibility in Switzerland and Ireland stems from both the revenue and the expenditure sides'', the Standard and Poor's report says.
It adds that the Cypriot economy is highly dependent on its tax regime to provide a distinctive appeal to foreign investors.
The index allows for cross country comparisons of government?s ability to adjust to adverse economic trends and to react swiftly and effectively in the wake of economic shocks, by modifying tax and expenditure policies in a way that safeguards smooth debt service payments.