articles | 20 May 2016

EC proposal to terminate excessive debt process for Cyprus

The European Commission said that it will propose that the European Council terminate the excessive deficit procedure for Cyprus, Ireland and Slovenia, after the three countries took effective action to reduce their fiscal deficits.

The Commission took the decision to recommend the end of the procedure - which, in the case of Cyprus, was launched six years ago, after Cyprus reported a budget shortfall of 6.1% of gross domestic product - after the three countries brought their fiscal deficit below the margin of 3% of economic output, as allowed by the European Treaty, the Commission said. “The correction is expected to be durable,” it added.

“That means their deficits are forecast to remain below 3% of gross domestic product in 2016 and 2017,” the statement said. “For Cyprus, this would mean an exit one year ahead of the 2016 deadline. If the Council so decides, this would reduce the total number of Member States in excessive deficit procedure to six,” which are Croatia, France, Greece, Portugal, Spain and the UK.

In spring 2011, 24 of the then 27 member states were in the excessive deficit producer.

“In 2015, the general government deficit amounted to 1.0% of gross domestic product,” the Commission said in a separate statement. “This improvement was driven by fiscal consolidation efforts and the fading-out of the one-off impact of financial sector stabilisation measures on the deficit of 2014”.

Source: Cyprus Mail

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