Επήεν ο μέτρ των δημοσιών σχέσεων του οποίου η δουλειά είναι εξηγά στους ιθαγενείς τι εστί οικονομία να μιλήσει στο συνέδριον του Economist. Η ομιλία του εν που δαμαί.
Economist Conference: Cyprus on the Mend?
25 November 2013, Hilton Park, Nicosia
Harris Georgiades, Minister of Finance
Ladies and Gentlemen,
Thank you for the invitation and for the opportunity to participate in this open discussion.
Let me also welcome once again the Troika mission chiefs to Cyprus but especially let me welcome Christos Staikouras, the Alternate Finance Minister of Greece, and to comment him on the efforts and determination of the Greek government and the Greek people.
Is Cyprus on the mend, we are being asked…?
Is the stability programme leading Cyprus to growth and prosperity?
One could say that this, in fact, is the 20 or the 23 billion Euro question. That’s the total of the bail-in imposed on uninsured depositors, together with the financial envelope of the programme and the top-up expected from privatisation and the asset-to-debt exchange. So one could say, it better work!
But let us take a step back. Because, if we are to determine if Cyprus is on the mend, we must ask: What was the problem in the first place. What is it that trying to mend?
The problem of the Cypriot economy relates, on the one hand,to the unsustainable course of our public finances. The public sector was spending more and more, even as revenues started to contract due to the dampened economic activity.
The direction of public expenditure was not well though either, as it primarily and increasingly comprised of payroll and pensions related expenditure. And also of rising but nontargeted and rather inefficient welfare spending. Successive tax hikes started being imposed to maintain the rising public expenditure long-before there was and MoU. And this, of course, further dampened economic activity.
But there were problems in the private sector also. The private sector was also spending more than it was earning or producing. And this relates directly to the oversized local banking sector and to the unsustainable credit expansion of the past decade.
The banking sector was financing not so much real investment that would in turn boost the productive capacity of the country but rather consumption and a property bubble. Lending was offered not so much on the basis of well though business plans and an assumed ability to re-pay but on the basis of collateral.
Collateral, by the way, which until now was practically impossible to seize.
So the problem was, in fact, multidimensional and it was major. Even the loss of access to the markets for Cyprus, back in spring 2011, was met with indecision and hesitation. Unwise political decisions were coupled with outright negligent and possibly criminal acts in the banking sector. The point of no return was reached earlier this year.
And here is where the economic adjustment programme or to refer to its full name, the Memorandum of Understanding on Specific Economic Policy Conditionality, comes in.
This is an ambitious and demanding programme with very tight timeframes and very specific policy directions. Let us highlight the word conditionality because it should be clear to everyone that the lending from the ESM and the IMF, even though attractive in servicing and repayment terms, is only offered on the basis of this policy conditionality. In any case, it is a programme which we are committed to implement fully and effectively.
The first pillar relates to the restructuring, recapitalisation and enhanced supervision of the banking system. Considering that the banking system was on the brink of collapse just a few months ago, and despite some regrettable delays that followed, the progress done so far has been quite remarkable.
The second pillar deals with fiscal consolidation. Here also we have been very determined to do whatever is necessary to bring public finances on a corrective course, from an early stage.
A final and important pillar has to do with measures of structural nature such as public sector reform, health care reform, welfare reform and of course the privatisation prospects.
On all these major reforms we are ready to consult and to consider all options. But we are determined to proceed. It is through such reform that we shall be laying the foundations of a new, more viable and more sustainable economic model for Cyprus.
Ladies and gentlemen,
We may not all agree on all the provisions of the MoU. It’s my signature on the document but I also have some doubts on a few things.
For instance, I am not happy with all the taxes that were included in the original MoU. Once agreed and imposed it is not so easy to go back and reverse them. But, at the very least, the emphasis of this government when it comes to fiscal consolidation is and will be on the expenditure side. We shall not be raising taxes further and this is a clear message which I would like to repeat.
There are other provisions where much depends on the implementation details. As a Finance Minister I will not be offering my consent to a National Health Plan that will run the risk of creating a new fiscal black hole. But I will be ready to offer my full support to a National Health Plan that will streamline expenditure, maximise efficiency and autonomy of public hospitals and ensure best utilisation of resources both public and private.
I could mention one or two additional issues but I will refrain from doing so because I think the facial expressions of the Troika representatives are already changing.
More importantly is should be clear that no policy document and especially no such a wide and inclusive policy document could meet the full agreement of everyone. Even if we were left without the Troika intervention we would not be able to agree fully between ourselves. Come to think of it, if we were left without the Troika we would never agree on anything between ourselves.
So we should move ahead. We have an action plan. It includes much of what should have been done in Cyprus a long time ago. It is a plan that aims to fix the public finances and the banking system and not only. It is up to us to complement it with initiatives that will encourage entrepreneurship and investment.
We have a plan, let’s stay focused and let’s do the job.
Thank you very much.
Εν θα σχολιάσω τα εγγλέζικα του κύριου Harris (μας) που εν ούλλον λάθη.
Ούτε εννα σχολιάσω το χιούμορ επιπέδου τριτοκλασσάτου manager περιφερειακών γραφείων πολυεθνικής εταιρίας που επήεν να πουλήσει πνεύμαν σε corporate συνέδριον σαββατοκυρίακου. Σαν το παρέαν δαμαί έναν πράμαν:
Αλλά θκυό πράματα εν ιμπορώ να μεν τα σχολιάσω.
1. "Successive tax hikes started being imposed to maintain the rising public expenditure long-before there was and MoU." Ώστε;;;... Καλάν, ότι λαλούν πελλάρες εξέραμεν το, αλλά να λαλούν τζιαι πελλάρες που εν τέλλεια αντίθετες της πραγματικότητας; Τόσον ο φόρος εισοδήματος, όσον τζιαι ο εταιρικός φόρος εππέφταν σταθερά που το '90... Αλλά σιγά μεν κοιτάξει τα στοιχεία του υπουργεόυ του. Εκτός βέβαια τζι αν εσύχχισεν το tax hikes με το plummeting taxes. Γιατί αν νομίζει ο Harris ότι ποθαμμάζεται που λλόου του ο κόσμος επειδή εσπούδασεν στο University of Reading, γελιέται.
2. Καλάν σιόρ, νομίζει που τ' αλήθκεια ότι εννα του δώκουν brownie points άμαν τους λαλεί ότι εν περίτου μουτζιαχενντίν του νεοφιλελευθερισμού που λλόου τους; Όξα χαρκιέται ότι άμαν τους λαλεί ευτυχώς που ήρτετε να παρακάμψετε κάθε δημοκρατικήν διαδικασίαν διότι εμείς εν ήταν να τα έβρουμεν ποττέ μόνοι μας, εννα του δώκουν το Milton Friedman award for neoliberal cockiness;
Μάσιαλλα του. Τζιαι τούτος ο άθρωπος νομίζει ότι εννα γίνει πρόεδρος της Κυπριακής Δημοκρατίας.