By Alexander Apostolides on October 12, 2012

Discussion turned into a debate - or the mistakes I made on live TV

On Thursday I wanted to talk about how to quickly make the government plan to the troika better. As I see it has 4 main flaws that I wanted to explain. 1) It does not include business cycles in taxation revenues and social expenditures, which would lead that we will commit to amounts that we will not be able to deliver, need new measures and new plans, spreading panic "ala Greece" 2) It postpones all issues of worth - structural reforms in the "future" through the use of "making reports on the issues" 3) There is no use of Greece's skills of does and don'ts - no understanding of best practise. 4) It ignored the ability to reduce co-sponsorship of EU funds (from 50/50 to EU 90/CY10) so that the real reduction in growth related expenditure is kept to a minimum. Lets explain this point: a) Lets say the government was giving 10 million for research and the EU topped it up by 10 million (co-sponsorship 50/50). i) Total Cyprus government budget cost 10m ii)Total expenditure for research 20m Now the government has to cut budget and cuts research from 10 million to 1 million. b)The problem is that for every 1 euro you take away you loose an additional euro from the EU funds. Why? i) New Total Cyprus government budget cost 1m ii)Total expenditure for research 2m Total reduction of expenditure 18m c) The solution is to ask the commission (and only the commission -= this is not a "troika" issue) to reduce the co-sponsorship level to 90/10. i) New Total Cyprus government budget cost 1m, but as the new ratio is 9/1 then the EU will provide ii)Total expenditure for research 10m Total reduction of expenditure 10m Yet all good plans of mice and men... i was led astray by the things I was hearing by my fellow panellist and looked to the past rather than the present. You can watch it here and tell me what you think...

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