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CY must apply now, Neophytou says

12/06/2012 10:11
DISY Vice President, Averof Neophytou urged the government to appeal to the EU bailout mechanism even today.

Criticisms turned against the President of the Republic, who “did nothing to secure a low-interest rate loan by the ECB for the support of the economy and the banking system before the recapitalization of Cyprus Popular Bank”.

Speaking to CyBC earlier today, Mr. Neophytou noted that Spain managed to secure loan with an interest rate of 3% while Cyprus received a loan from Russia with an interest rate of 4.5%.

“The government says that Spain’s fiscal deficit and debt is higher than that of Cyprus, which is true, but Spain is reliable and this has been ignored by the government”, he noted.

“If, then, Spain got such a loan, our country will be able to secure one with an interest rate of lower than 3%. Why didn’t the government do it?”,

“Cyprus should have applied at the same time as Spain because Europe would have been called to find common ground. We could have applied even today, certainly before June 17”, he added.

According to Mr. Neophytou, Cyprus Popular Bank needs €1.8 billion but this could increase to €2.5 billion if its bonds are not converted.

In July, the state will need €400 million to renew the government bonds. By the end of the year, it has an obligation to cover the fiscal deficit and by early 2013 it will need €3 billion. It will also need €45 million to strengthen CAIR’s capital base.

“The President of the Republic is responsible because he left the country without help, unlike a technocrat, former Greek PM, Lucas Papademos, who managed to protect his country’s interests and got €48 billion to prevent the banking system from sinking.

Mr. Neophytou agreed with Mr. Shiarly’s statement that bailout will not concern banks only.

“Mr. Shiarly, an excellent and honest technocrat, reminded yesterday that Cyprus has been excluded from the global markets”, he stressed.

FINMIN was clear, Stephanou says

Government Spokesman, Stephanos Stephanou stated that if a country turns to the bailout mechanism, this tool involves talks for the entire economy to ascertain whether this euro area member state will be able to repay.

“If it wasn’t for the recapitalization of the banks, we wouldn’t talk about a bailout mechanism”, he stressed.

Mr. Stephanou admitted that the decision taken by Eurogroup for the allocation of €100 billion to strengthen the country’s banks is a good precedent, however, some other countries that turned to the mechanism had been imposed various measures. Ireland, for example, now requires renegotiation of the memorandum due to the new approach to Spain”, he said.

“Both the Finance Minister and the CB Governor emphasized last night that the island’s economic conditions are not as dramatic as some say”.

“If we appeal to the mechanism, the amount will be negotiated. As Cyprus, it has its own plans to cover the fiscal needs. It is not necessary that we will be imposed a Greek-type memorandum, because Cyprus’s financial data are better than those of Greece or Spain”, he noted.

As for efforts to secure loan from third countries, Mr. Stephanou said that if they are fruitful, there will be no need to turn to the mechanism.