Court decision could ruin Cypriot economy, finance minister warns

Source: Xinhua| 2019-09-20 04:57:15|Editor: Mu Xuequan
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NICOSIA, Sept. 19 (Xinhua) -- A Supreme Court decision on a case brought by civil servants demanding restoration of their salaries before cuts imposed during the 2013 economic crisis could lead to a new devastating crisis, Finance Minister Harris Georgiades said on Thursday.

"This is the biggest and most direct financial risk that could undermine budgetary stability," the minister said, adding that in a worst-case scenario it could cost the state as much as 3 billion euros, about one third of the budget revenue.

Georgiades was briefing the parliamentary finance committee one day after the cabinet approved the budget he prepared for 2020.

This would be his last budget, as he gave notice that he would be resigning after years in the post. He was credited with leading Cyprus' economy from its 2013 tatters to a brisk growth expected to be close to 3 percent this year.

However, he was criticized for the sale of the former nationalized Cyprus Cooperative Bank to a smaller private lender after the European Central Bank said the state could not subsidize it any more.

Reports said Georgiades would be one of the ministers President Nicos Anastasiades would replace in Nov. 1 reshuffle of his government.

A lower panel of the Supreme Court has already ruled that the salary of civil servants is part of their property which the constitution prohibits being reduced in any way.

Georgiades said next year's budget which will be presented to parliament for debate was balanced and provided for a surplus.

"This is another budget without deficits. It is balanced, in surplus, contains no new measures, new taxes or new levies," Georgiades told the committee.

Asked about the impact of the Brexit on the Cypriot economy, especially a hard one, the minister said that the cabinet had examined the issue during the budget discussion on the basis of a report submitted by the foreign minister.

"We think we are sufficiently prepared for any eventuality. It will be a negative development to have an exit without a deal but this eventuality is to a large extent the key scenario across Europe and so they have all prepared," he said.

Cyprus' main business association said Cyprus' losses will come from a weak pound, which will affect the tourist sector, as holidays will become more expensive for Britons. Cypriot exports will also be more expensive and could fall.