Cyprus President speaks of “a new economic miracle”

Cyprus President speaks of “a new economic miracle”


By Kyriacos Kyriacou-Nicosia

President of the Republic Nicos Anastasiades stated today that Cyprus is on track for a new economic miracle, in the wake of praising reports by European media over the islands` impressive performance amid a deep financial crisis. The President’s statement comes at a time were hundreds of “unimpressed” workers in the three semi-state organisations, Cyprus Telecommunications Authority, the Cyprus Ports Authority (CYPA), Cyprus Electricity Authority strongly protest against a privatisation bill, currently discussed at the Parliament.

Anastasiades comments came in the wake of remarks by its international lenders that Cyprus is so far the only country under an economic adjustment program to outperform its fiscal targets, performing better than Ireland, which exited an economic adjustment recently. Faced with the collapse of its oversized banking sector, Cyprus agreed last March on a €10 billion bailout which featured an unprecedented haircut on deposits and the closing of its second largest banks. Coupled with capital restrictions, the island`s economy entered into a deep recession, which however was much lower than the 8.7% envisaged by the Troika.

“It seems that Cyprus in on track for a new economic miracle, which does not elude the attention and the appreciation of our international lenders but also of the international press,” Anastasiades told a reception in the Presidential Palace for the Cyprus Exports Award 2012.

The first economic miracle

Following the 1974 Turkish invasion of Cyprus, which resulted in the occupation of 37% of the island`s territory and the devastation of its productive capacity, Cyprus by the 1980s recovered owing to strong tourist and a thriving services sector, in what has been described an economic miracle.

The President pointed out that just eight months from tough Eurogroup decisions and after three years of consecutive downgrades by rating agencies, Cyprus received its first upgrade last November, while it received three positive program reviews by its international lenders, the European Commission, the European Central Bank and the IMF, collectively known as the Troika.

Anastasiades also said the targets for the primary surplus (the balance excluding debt servicing expenditure) in 2014 will be significantly lower, estimated at €277 million or 1.8% of GDP compared with the previous target of €483 million or 3% of GDP.

He also recalled that international media and especially “Germany`s strict financial press after a series of negative reports today are making praising reports for the recovery of the Cypriot economy and the efforts to go ahead with structural changes and the necessary reforms.

“Our vision is to restore Cyprus` credibility abroad soon and mainly to become an important base for business and entrepreneurship in the wider region,” the President concluded.

Positive reviews send message

The positive reviews and comments on Cyprus’ implementation of its adjustment program send a message of normalization to markets and investors, Government Spokesman Christos Stylianides has said.

Asked to comment on positive statements by European officials on Monday, in the context of the Eurogroup meeting in Brussels, he said “all these positive reviews on the implementation of Cyprus’ adjustment program have to do with the implementation of the government’s policy but mainly reflect the maturity of the people of Cyprus, who have proven that in difficult times they can pull through and that this attitude will bear fruit in the end.”

Privatisations bill

Meantime, Cyprus Minister of Finance Harris Georgiades and the Parliamentary Committee of Finance continued today discussions on a privatizations bill, the approval of which is considered prerequisite for the disbursement of the fourth tranche.

One of the preconditions of the 10 billion euro bailout, signed last March,  was the implementation of a privatizations plan covering the disposal of Cyprus Telecommunications Authority and the Cyprus Ports Authority by 2016 and the Cyprus Electricity Authority by 2018 to generate €1.4 billion to restore public debt sustainability. The bill should be approved by March 5.

So far three parties, the left-wing AKEL, the Social Democrats EDEK and the Ecologists said they will vote against the government bill. Ruling Democratic Rally (DISI) said it will propose amendments to the bill, while coalition partner Democratic Party (DIKO) said it would vote for the bill if the role of the parliament in the privatizations process will be enhanced.

Georgiades told the Committee that he wishes to secure a say to the parliament even at the final stage of the process, the disposal of a Semi Governmental Organisation, recalling however that according to the constitution, the parliament vote is needed only for the legislation amending the ownership status of the organizations to be privatized, as was the case in the disposal of the Cyprus Development Bank that has been privatized in the past.

The Minister reiterated that the rights of the employees in these organisations are safeguarded by the state, adding they too could participate in the acquisition of a stake in the organization under privatization either collectively through their pension funds or individually.

Last Monday and Friday, hundreds of workers in the three semi-state organizations went on strike protesting against the privatisation bill.