Bill creating hydrocarbons fund to be expedited

Party leaders and the government agreed on Thursday to expedite approval of a bill creating an investment fund to manage future income from hydrocarbons.

Speaking after a meeting of the leaders’ council, government spokesman Prodromos Prodromou said a special session of the House finance committee has been scheduled for Monday to discuss the matter.

The chairman of the committee, Disy leader Averof Neophytou said his party will support the bill, adding that revenues would not be spent on wellbeing but on the future.

He said this is also a message to Turkish Cypriots, whom he urged to contribute to the solution of the Cyprus problem since the revenues belonged to the Cypriot people.

“So, let them contribute to the solution of the Cyprus problem so that we can enjoy the common benefits and the common future,” Neophytou said.

Turkish Cypriots, with Turkey’s support, have demanded a say in the administration of natural gas revenues, something the government rejects as long as the island remains divided.

What is known is that under certain circumstances, the government will be able to use part of the revenues to reduce government debt and for other purposes.

As it stands, the bill stipulates that as long as the public debt is above 80 per cent of GDP, half the hydrocarbons revenue would go towards reducing this debt.

When it is below 80 per cent but above the limit of 60 per cent – set by the Maastricht criteria – only 25 per cent of revenue would go towards the public debt and the rest would be used for the creation of reserves.

Once gas revenues start flowing in – not for years to come – the fund is expected to aggregate hundreds of millions.

But investing those amounts into the Cypriot real estate market, for example, would wreak havoc with property prices given the relatively small size of the local economy.

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