Cypriot Finance Minister Charilaos Stavrakis presented his budget for 2009 last Thursday for what he described as a "difficult year" ahead.
Stavrakis said: “The 2009 budget will be socially sensible, highly developmental and balanced.” It contains a massive 26% increase on last year’s public expenditure, amounting to “the biggest social spending increase in ten years,” he added.
Development spending will also increase, with EUR1.09bn earmarked for 30 major development projects in Cyprus, a 15.5% increase in funding compared to last year.
The Finance Minister underlined that the Cypriot tax system would not undergo review at this point and all taxes will stay the same for the time being, apart from those necessitated by the European Union.
Stavrakis said that income raised from income tax, corporate tax and capital gains tax in 2009 is likely to contract by 3.1% while revenues generated from VAT, import taxes and consumption taxes are estimated to grow by 7% when compared with 2008.
Stavrakis expects slower growth in 2009 but he nevertheless intends to reduce national debt from 60% of gross domestic product in 2008 to 45% in 2009.
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