After a long discussion over the draft budgets of Eurozone member-states, the Eurogroup adopted the opinion of the European Commission and has concluded that the draft budgets for Germany, Ireland, Cyprus, Holland, Austria, Slovenia and Malta are in line with public debt measures but deviate from the fiscal targets regarding the deficit.
The president of the Eurogroup Jeroen Dijsselbloem said that these measures will be requested only if a deviation from the reform target is found, adding that this is an additional prerequisite in the case of Cyprus.
Dijsselbloem also said that Cyprus is very close to a balanced budget, but that the European Commission says there is a large gap in terms of structural deficit, and that it is under discussion with Cypriot authorities on whether that is truly the case.
Commissioner Pierre Moscovici said that he agrees completely with the assessment, adding that the structural difference is significant, but that the Commission is willing to discuss it.
Cyprus’ Fiscal Council in agreement
Meanwhile the Fiscal Council has issued a press release in which it is essentially in agreement with the Eurogroup and European Commission appraisal.
“After examining all data, the Council is of theopinion that for the year 2016 there is conformance with the Directive for Fiscal Targets, while for the year 2017, there is the danger of deviating from it”, said the press release.
The Council goes on to stress that recent experience from the European debt crisis shows that structural deficits are better predictors of potential fiscal trouble than simple deficit measures.
FinMin: No additional measures necessary
Finance Minister Harris Georgiades issued an announcement in which he downplays the potential for additional fiscal measures.
“I had today the opportunity to repeat, in front of the Eurogroup, the commitment of this government to continue wise management of public finances. For 2017, the Commission projects for Cyprus a deficit of 0.4% of GDP, which is, for yet another year, one of the best fiscal performances among member states”, said Georgiades.
He continued: “The debt directive is satisfied and no additional measure is necessary. Measures will become necessary only if the potential dangers pointed out by the Commission are confirmed, and this is an additional reason to continue efforts for viable growth and maintaining fiscal discipline.”