NICOSIA– The target is to bring public deficit down to around 2.5% in 2013, Minister of Finance Vassos Shiarly has said.

Shiarly was replying to questions during a press briefing of international media after the conclusions of an informal ECOFIN, which took place inNicosia,

“Roughly we are working with the aim of having a public deficit of 2.5% for the next year, so the measures needed in order to be able to secure that budget deficit is something that will be debated for the first time tomorrow”, he noted adding that “whether that will become public, I don’t know”.

Asked to name the two main issues of contention between the government and the Troika during talks so far he said that “I think one would be the establishment of the amount required for the recapitalisation for the banking sector”.

The second one, he added, “is the extent of the structural changes that need to be made and the timing of those structural changes”.

He continued to point out that “it is well known that we have requested a longer period of adjustment because a frontloaded adjustment might cause a slowing down of the economy or a recession, which we don’t believe that is conducive to the economy at this point in time”.

“We want to maintain some momentum of the economy”, he stressed, arguing that “it is well known that where very tough initial austerity measures have been introduced there is a tendency to create a greater recession than would be allowable, so you don’t necessarily get the best results”.

Replying to a question on whether the corporate tax will be increased as a result of troika proposals, Shiarly said that “corporate tax is not an issue”, adding that “it has never been debated”.

“We are very anxious to maintain that and I think that message has gone through”, he noted, adding that “wherever in the world there is low taxation you have growth in the economy”.
Shiarly also overruled the possibility of state liquid assets running out. “I am not worried”, he said.