Decisions of the plenary of the C.C. of AKEL on the 2016 State Budget

AKEL C.C. Press Office, 14th December 2015, Nicosia

The Plenary of the C.C. of AKEL convened today on 14th December 2015 and discussed the 2016 State Budget. The debate took place on the basis of the comprehensive document prepared by the Economic Research Bureau of the C.C. in which the international economic situation and the performance of the economy are analyzed, together with the parallel analysis of the sectors and branches of the economy and a detailed presentation of the State Budget of each and every Ministry and Government Department.

On the basis of the discussion and interventions made, the C.C. of AKEL arrived at the following observations and conclusions:

1. On a global level weak growth is being observed, which is based in developing economies who however are recording a slowing down in their growth rates.

2. Social inequalities are growing, leading millions of people to poverty and living conditions characterized by deprivation and misery.

3. On a European level the crisis is of longer duration due to the neoliberal economic policies pursued. More specifically, the prospects for recovery in the Eurozone remain slim.

4. The framework established by the EU in conjunction with the economic policies that are being imposed contribute towards further intensifying the attacks against the poor, the working people and in favour of the interests of big capital.

5. The Cyprus economy is currently in a period of redistribution of wealth and income to the benefit of the select few and privileged.

6. 10% of the most privileged saw their revenues grow at the expense of others who have shouldered the burden of the crisis.

7. With the implementation of the Memorandum and the corresponding economic policies, the objective of the government is to sell off of public wealth and assets and create conditions for maximizing the profitability of big business.

8. The effect of the measures taken by the Government has created serious difficulties for households and SME’s, and has a negative impact on the living standards of Cypriot society.

9. The purchasing power of wages has returned to the levels 1996, while 234,000 of our fellow compatriots are on the poverty line.

10. At the same time within the framework of the Memorandum the destruction of production is enormous.

11. Public debt is continuing its upward trend and today has exceeded 100% of GDP currently reaching 109.7%.

12. The continuous increase in debt is also reducing the prospects for growth, given that a big part of public resources is the expenditure for repayments.

13. The fiscal balance has registered an improvement; nevertheless the cost to development and social cohesion is unsustainable.

14. The intensity of the austerity measures imposed continues to have a strong impact on the labour market, both with regards the scale of employment and unemployment. The policy pursued by the Government has exacerbated employment conditions, also through the growth of flexible forms of employment.

15. At the same time, the reduction of salaries in the Cyprus economy, is first and foremost affecting the ability to repay private debt and as a consequence reduces the solvency of Cypriot households.

16. The reduction in labour costs did not improve the competitiveness of the economy but on the contrary helped to increase the profit margin for companies.

17. For the ensuing years at the forefront of the Government’s objectives will be the carrying out of neoliberal reforms such as privatizations, the implementation of foreclosures of primary family homes and the further deregulation of labour relations

18. The state budget for 2016 includes again reduced spending on public investments and social benefits. It is therefore another anti-growth austerity budget.

19. On the section concerning expenditures, the 2016 budget follows the same philosophy as the previous ones. The non-existence of expenditure for growth and development, despite the partial increase in co-financed projects also reflects the inability of the State to become a facilitator of growth.

20. Social benefits continue the decline witnessed all through the previous years by € 42 million as opposed to the increase in operating expenses by € 225 million in comparison to 2014, especially in the market of consulting services that registers an increase of € 30 million compared with 2014.

Based on the above findings the C.C. of AKEL considers that:

Priority in the current circumstances must be the improvement in the living standards of working people and the redistribution of wealth in order to strengthen social justice. Therefore, the distribution of expenditures must provide support to working people and vulnerable groups

At the same time emphasis must be given to the utilization of public resources for development and growth instead of creating excessive surpluses in public funds, which aim at receiving the Troika’s compliments to the detriment of the public interest.

At the same time, the revenues of the State should be the product of a progressive taxation that will allocate the burden of the crisis depending on the capabilities of each person.

On the basis of the above, the Plenary of the C.C. of AKEL has unanimously decided to vote against the State Budget for 2016.

AKEL will submit proposals for a reduction and freezing of funds aiming to exercise better parliamentary control.