The extra spending will raise the public deficit to 3.8% of GDP, Finance Minister Constantinos Petrides said.

The supplementary budget was green-lit by the cabinet last week, but needs the nod from parliament.

The planned additional spending includes €140 million in support to businesses and the self-employed.

The fiscal hit of the €250 million corresponds to about 1.2% of GDP, Petrides told MPs.

Due to the continuation of the coronavirus-related restrictions, throttling business activity, the finance ministry has revised its GDP growth rate for 2021 down to 3.8% from 4.5% earlier.

“The pandemic is ongoing for 14 months, and inevitably this impacts the growth rate,” he said.

As for the deficit, it’s now projected to reach 3.8% by year’s end, then declining to 1.1% in 2022, and to zero by 2023.

The government anticipates a 1.4% budget surplus in 2024.

These are preliminary estimates, Petrides qualified, but added that the real numbers could turn out even better as the estimates haven’t factored in the positive impact of funds coming in from the EU’s Recovery and Resilience Facility.

Asked about the parties’ continuing demand that the government directly subsidise struggling businesses’ rents, Petrides again ruled it out.

He said government assistance in this area has to date amounted to €335 million – over and above the some €300 million paid annually in rent by businesses across the island.

The minister was challenged by Diko MP Christiana Erotokritou, who cited a Eurostat graph ranking Cyprus as the second worst country – after Croatia – in terms of the percentage drop in workers’ wages among countries eligible for EU aid.

Petrides said the Eurostat data are wrong, as they fail to properly take into account the support measures.

For her part, Labour Minister Zeta Emilianidou said the €140 million to be disbursed by her ministry relate to support schemes for employees up until the end of June.

The figure includes €30 million in the form of direct subsidies allocated to supporting food and beverage establishments, operating at below capacity due to the coronavirus protocols.

“Following the payment of benefits for March, to be made on the 12th of this month, our objective is to pay out the €30 million that concern support to the self-employed and businesses, which is an additional support beyond the €200 million now being given by the finance ministry,” she said.

Gyms and dance schools are also eligible for part of this €30 million.

Those eligible need not re-apply; the applications filed for March are sufficient.

Meanwhile the €250 million package includes €60 million for spending on coronavirus testing, vaccinations and enforcement of health protocols; and another €50 million is being kept in reserve for emergency expenditures.

Health Minister Constantinos Ioannou said that during the past week some 350,000 PCR and rapid tests were carried out – calling the mass testing a major pillar of the policy for easing restrictions.

Christina Yiannaki, permanent secretary at the health ministry, said that so far the government has spent €19 million on PCR and rapid tests.

Of this, €11.1 million went to PCR tests, €1.5 million on the carrying out of rapid tests, and €5.4 million on the purchase of the rapid tests..

Source: Cyprus Mail