TUESDAY, 21 AUG 2018



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Invest Cyprus 30/04-30/03/2019

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Georgiades: Reform Should Be a Never-Ending Process

Georgiades: Reform Should Be a Never-Ending Process

The Minister of Finance, Harris Georgiades, spoke to GOLD about the reform of the tax system as well as the reforms regarding the management of public finances and public debt.


What are the major changes that have taken place during your time in office?

The single most important internal reform has to do with the management of public finances (PFM). Until 5 years ago, we were operating with unsustainably high deficits, the budgetary process was rather loose, there was no limit to the number supplementary budgets, or to the granting of government guarantees. All these have changed. Through the new umbrella law on the management of public finances and also through the new law on the accounting process, we have enhanced fiscal responsibility which in turn, is enabling us to operate with a balanced budget. So, obviously, the PFM reform carries much wider ramifications.

A second important internal reform involves the merger of the previously separate Inland Revenue Department and VAT Service into a single Tax Department.

Also important is the enhanced framework for the management of the Public Debt, with tangible results in the form of the lowering of the debt levels and of the cost of debt and the extension of debt maturities.


How difficult was your task? Did you face a lot of opposition within the ministry?

Generally speaking these reforms received strong support from the relevant departments and this is something I should acknowledge publicly. Amongst the obstacles to the reform process I can count several factors, but not the services of the Ministry of Finance.  


Regarding improved services to citizens, what has been achieved?

First and foremost, our taxpayers, both corporate and individuals pay less tax! This is a result of an ambitious reform of our tax system, which took the form of more than 15 legislative actions, which reduced or cancelled taxes or introduced tax breaks and incentives.

Secondly, our fellow citizens as well as businesses, enjoy a restored confidence in our banks. This is the result of an ambitious joint effort on behalf of the Government, the Central Bank and the banks themselves, aiming at the reform and the restoration of the soundness of the sector.

The merged Tax Department is not only an internal reform but also one which enhances service to the taxpayers. For instance the establishment of the Large Taxpayers Office (LTO) serves a relatively small number of corporate, which contribute more than 40% of total tax revenues.

I should also mention the significant extension of the network of Citizens Service Centres (one-stop-shops) and the extension of service hours across the public sector, which is a result of the establishment of a continuous workday and the abolition of once-a-week afternoon work for the civil service. 


How difficult was this task? Did it require a new mindset on the part of civil servants? How did you go about introducing this?

I will say again that I do not consider my staff as part of the problem. In fact, I feel that when the Anastasiades government took over, the morale of the Ministry of Finance staff was low, as a result of the events which led to the financial collapse. But once there was a new direction, the Ministry of Finance staff rose to the occasion, undertook the heavy burden of implementing the bulk of the Memorandum of Understanding signed with the Troika and continued to function with a sense of responsibility, which is appropriate to any Finance Ministry.


What single change would you point to as being your major achievement in the context of reform during your term of office?

Based on what I have mentioned above, it is the balancing of the budget and the subsequent promotion of a number of tax breaks. For me, this counts as a most significant reform, together with the reform of the banking sector.


What reforms involving your ministry remain incomplete and in need of implementation by the next government?

One important reform which will remain incomplete is the establishment of a new Independent Supervisory Authority for the Insurance and Pension Funds Sector.  Secondly, it is the reform of the governance structure of the Central Bank, which we are promoting in collaboration with the Central Bank itself. And I suppose, the CYTA corporatization bill will most likely stay behind, and will be up to the next government to promote.


In general, how important in your opinion is the concept of public service reform to Cyprus?

I believe that everything starts and ends with reform. I am honoured to serve a Government which has, arguably, implemented the broadest reforms since independence and which remains committed to continue promoting reform. As I have mentioned time and time again, reform should be a never ending process. This is how we can maintain and enhance our competitiveness, our productive capacity and serve our people on the basis of their rights and needs. 



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