President Christofias Announces New Measures to Boost Economy without Raising Taxes
Nicosia, Feb 3 – Cyprus President Demetris Christofias announced in Nicosia Tuesday new additional measures to accelerate the growth rate of the local economy and to maintain unemployment at low rates without imposing any new taxes. The measures will cost approximately 300 million euro and relate mainly to the tourist sector, with approximately 51 million euro, and the construction sector with approximately 245 million.
Speaking during a press conference after an extraordinary meeting of the Council of Ministers, President Christofias said that in the tourist sector the government decided to abolish the overnight stay fees which the local authorities take from hotels, to lower the landing fees which airlines pay, to reduce the VAT rate from 8 to 5% in overnight hotel stays and to implement a plan to strengthen local tourism. These measures will cost 51 million euro, the President said.
For the construction industry, President Christofias announced measures totaling 200 million euro which include a new loan plan to couples with low and middle income, the construction of new refugee estates, as well as the construction and repair of school buildings and projects for social care.
At the same time, the government decided to maintain existing deposits in the banking system totaling 700 million for a further three and a half months, in an effort to boost the banks’ cash flow and repeated a call to banks to lower their interest rates.
President Christofias told reporters the global economy is facing a very difficult time and forecast for 2009 is grim. “The Cyprus economy is expected to be affected to a relatively smaller extent, especially compared to Euro-zone countries,” the President noted.
He said the government has effectively and timely drawn up a new plan to handle the crisis.
Furthermore, President Christofias said the new measures took into consideration the suggestions of the political parties, the unions and other organizations as well as the state’s fiscal capabilities.
The President said that the framework of the government’s policy to boost the economy is based on five pillars, aiming to increase the implementation rate of the development program, ensure the adaptation of the offer and prices to levels anticipated in the medium-term, accelerate major development projects focusing on boosting governmental housing programs, provide additional support to the local authorities to implement local projects and simplify administration procedures to overcome bureaucratic obstacles.
The President said that “in this framework the private sector must play its own role and contribute constructively to combating the financial crisis.”
He noted that the government is following a sound economic strategy during the current unprecedented international financial crisis and that the policy that has been adopted supports the sensitive sectors which have been affected mostly by the crisis.
President Christofias called on bank organizations to reduce borrowing rates. He also said that Cyprus Finance Minister will sign an agreement with the European Investment Bank in March, providing for loans under favorable conditions, amounting to 300 million, to finance primarily small-medium enterprises.
With regard to unemployment, the President said that given the fact that unemployment rate is expected to rise up to 4.5%, the government intends to promote a series of measures to maintain unemployment at low levels.
He said that these measures provide for additional efforts to find jobs for the unemployed, reevaluation of the strategy for the employment of foreigners from third countries, intensification of the campaign to combat illegal employment, introduction of a new vocational program for the unemployed and a program to train employees who may be underemployed due to problems which businesses face.