SPEAKING at a meeting of the European Parliament’s Economic and Monetary Affairs Committee on Monday, about the Cyprus economy three years after the bailout, finance minister Harris Georgiades said the government had not included potential revenue from its gas finds in its medium-term economic planning. He said that was the policy the government had chosen and described it as a “wise choice.”
He told the committee: “Obviously the revenue stream, when it comes in four or five years, it will be very welcome. But we chose to assume zero revenues, in order to achieve whatever else is necessary in order to consolidate our finances and manage our debt.” It was a prudent decision because nobody could safely predict when there will be revenues from natural gas and how much these would be. There are too many unknowns, the energy market being totally unpredictable, to make any assumptions about gas revenue.
At least this government has learnt that nothing can be taken for granted regarding the prospective exploitation of natural gas. Compare this with the complete ignorance displayed by the ministers of the Christofias government when, in the bailout negotiations with the troika, they had insisted that the revenue from the natural gas should have been taken into account in drafting the assistance programme. The assistance programme ends in less than two months and there has still not been a cent in revenue from our natural gas.
The members of the troika were too smart to accept the argument of the clueless AKEL ministers, who misleadingly claimed at the time that the lenders wanted to take control of the island’s hydrocarbons. They have been proved wrong on both counts, but they are not the only ones. The leader of the Citizens Alliance, Giorgos Lillikas argued that we could avoid the bailout by raising the billions needed by the state and the banks, through pre-selling hydrocarbon deposits. Like AKEL’s naive ministers he displayed an embarrassing level of ignorance regarding the energy market.
This government, thankfully, is not making the same mistake. It appears to have learnt enough about the uncertainty that marks the energy market by now, to exercise caution and avoid the wishful thinking scenarios embraced by most of our political demagogues. Georgiades has been absolutely right to refuse to include projected gas revenue in the government’s medium-term plans. If and when there is a revenue stream we are sure we would find ways of spending it, but until then we should live within our existing means.
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