NICOSIA: Cyprus must act urgently to deal with the imbalances in its economy, taking action to cut the fiscal deficit and public debt, the European Commission has said.
The warning was given by the spokesman of EU Economic and Monetary Affairs Commissioner Olli Rehn in remarks to Phileleftheros newspaper on Sunday.
It came only two days after President Christofias indicated that although the government would persevere to fulfill its pledge to the EU to cut the fiscal deficit to 2.5%, it “would not be the end of the world” if it ended up at 3%.
During the same press conference Christofias also signaled there would be no new taxes, but that emphasis would go on collecting unpaid taxes from business.
Cyprus was among the 12 Member States which were identified in the EU’s Alert Mechanism Report in February as needing further analysis.
In his remarks to the Sunday Phileleftheros, Rehn’s spokesman Altafaj Tardio said Brussels expected Cyprus to act on the seven recommendations contained in an EU report earlier this week which said that Cyprus experiences an “internal imbalance” due to its banking sector and the indebtedness of the corporate sector imbalance on its fiscal dynamics and competitiveness.
That report argued that for Cyprus to put its economy back on track it must among other improve tax collection, fight tax cheats, reform the automated adjusted cost of living allowances and curb waste in the public sector.