Cyprus to return to growth in 2015

Cyprus to return to growth in 2015

Nicosia, October 5, 2015/Independent Balkan News Agency

By Kyriacos Kyriacou

A return to growth as from 2015 the Cypriot Ministry`s of Finance Public Debt Management Office (PDMO) forecasts in its newsletter for October, taking into account the improved business operating environment.

According to the newsletter, in the 2nd quarter of 2015, the rate of growth (in seasonally adjusted terms) accelerated to 0.8% compared with a rate of growth of 0.1% in the 1st quarter of 2015 on an annual basis.

“Having regard that, the business operating environment exhibits signs of growth amid improving conditions given a marginal positive lending to non-financial corporations in conjunction with falling interest rates, we assume a return to growth as from 2015”, says the newsletter.

As regards to fiscal developments the general government budget balance (GGBB) was in surplus during the period January-August 2015 of the order of €118.8 mln (0.7% of GDP) compared to a surplus of €141.5 mln (0.8% of GDP) during the same period of the previous year. General government primary balance (GGPB) was in surplus during the period under review, of the order of €472.3 mln (2.7% of GDP) compared to a surplus of €473.5 mln (2.7% of GDP) during same period of the previous year.

Total revenue exhibited a slightly negative rate of growth of around 0.8% during the period January-August 2015, reaching €4,426 mln compared to €4,461 mln during the same period of the year before. This outcome is mainly attributed to a lower Central Bank dividend received this year compared to the one received during April 2014, by about €30 mln.

Total expenditure exhibited a marginal negative rate of growth of around 0.3% during the period under review, reaching €4,307 mln, compared to €4,319 mln during the same period of the year before. Intermediate consumption, compensation of employees and social transfers exhibited a decline of the order of 7.7%, 1.7% and 2.7% respectively.

As regards to public debt and financing, the volume of issued Treasury Bills has been reduced significantly by the PDMO as the better than predicted fiscal situation has led to the creation of significant cash reserves. The initial target of maintaining €500 mln of short term debt has been revised to €400 mln, a target that was achieved during the last auction on the 2nd of October.

Yields have been reduced significantly with the weighted average yield for 13-week Treasury Bills dropping to 1.58% from 1.87% in September.