The Tribune

By DANA SMITH

Tribune Staff Reporter

dsmith@tribunemedia.net

THE government’s mid-year budget is a “fiscally responsible plan” that will get the country “ahead of the curve” without a need for drastic cuts to public programmes, State Finance Minister Michael Halkitis said yesterday.

He was speaking in the House of Assembly on the newly unveiled 2013/2013 Mid-Year Budget Statement.

“Our medium-term plan is measured and balanced, comprising: expenditure restraint; enhanced revenue administration; new sources of revenue; and a focus on stronger economic growth,” he said.

“The implementation of the plan is also gradual and ongoing. As such, it is an economically and fiscally responsible plan that gets us ahead of the curve, so to speak, without the need for desperate and drastic cuts to public programmes, services and employment.”

Mr Halkitis said a “core action” of the plan is to reduce recurrent expenditures with the end-goal of dropping the GDP ratio from its current level of 21 per cent to 19.1 per cent by 2016/2017.

“In addition, the Ministry has already moved to strengthen fiscal controls within the public sector and other public agencies. While this move has received some coverage in the press, I want to clarify exactly what has transpired,” he continued.

“In his letter to public corporations, the then Financial Secretary stated clearly that they should develop plans to reduce direct and indirect subventions to their organization by 25 per cent within the next two fiscal years, with at least 10 per cent in 2013/2014.

“The letter was also explicit that the reduction should be achieved without any reduction in quality and level of services to the public or any forced reduction in head count. The proposed measures should also be benchmarked to cost of service, the market or the public’s ability to pay.”

The expectation is, Mr Halkitis said, that at least 50 per cent of the reduction will be achieved through improvements in organisational efficiencies.

The Minister also noted the Finance Ministry has also begun work on several “policy initiatives” to improve the country’s financial situation.

“These include: an investigation of the public pension system with a view to enhancement and reform, utilities conservation; asset and vehicle management, in addition to more fundamental reforms of our fiscal practices and a new framework to improve internal controls,” Mr Halkitis said.

“Last Friday, permanent secretaries and heads of departments were briefed on the new requirements for budget submissions and monitoring.

“The meeting will be followed up shortly with a seminar dedicated to developing new strategies for revenue management, many of which will be revealed during the annual budget exercise and a seminar on expenditure containment, both in the state owned enterprises and the public sector.”