ECONOMY

Cyprus uses surplus to fund welfare package

NICOSIA (Reuters) – Cypriot President Tassos Papadopoulos, seeking re-election next year, announced a 75-million-pound ($192.3 million) benefits package yesterday after an unexpected surplus in state accounts. Papadopoulos said the seven-point package was a gesture of «appreciation» to the public ahead of Cyprus’s entry to the eurozone on January 1, and underscored the economic achievements of his administration, seeking a new five-year mandate on February 17. «Our admission to the eurozone has been made with joint efforts and sacrifices. The government had repeatedly stated it would show its appreciation with targeted measures of social support,» Papadopoulos told a news conference. He said authorities would make one-off payments to pensioners, set up a social welfare council, increase benefit payments to large families and soldiers, and slash heating fuel tax to 1.2 cents from 7.3 cents per liter. Cuts in heating fuel tax had been a longstanding demand of consumers. The Finance Ministry only recently ruled out such a cut. Papadopoulos said the allowances, which came in addition to another 111-million-pound welfare package in June, were permissible after better-than-expected economic achievements. Authorities expect a rare budget surplus, of 1.5 percent of gross domestic product in 2007, from earlier expectations of a deficit. Papadopoulos’s administration wrestled down a budget deficit nudging 6.3 percent when it took over in 2003, and public debt which then exceeded 70 percent of GDP. Public debt is expected to subside to 60 percent in 2007, and to 48 percent next year. «We achieved our target of joining the eurozone, without any additional taxation, or sacrificing our social policy in the slightest,» Papadopoulos said. Opinion polls suggest a close race between Papadopoulos and his two challengers, Communist candidate Demetris Christofias and Ioannis Cassoulides, backed by the right-wing Democratic Rally party. Elections are scheduled for February 17, with a runoff most likely on February 24. Although Papadopoulos is leading polls, some suggest he could lose out if his challenger is Christofias in the second round.