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MoF plans derailed

30/01/2015 08:57
Yesterday’s decision of the parliament to extend the suspension of foreclosures upsets the government’s plans for debt issuance and use of the ECB quantitative easing, Finance Minister, Haris Georgiades stated today.

Mr. Georgiades, speaking on the state radio this morning, expressed the view that the margins of the country’s reliability are beginning to limit “and this is even more serious than the reserve of the country’s funds”.

Asked if the state coffers can withstand, the Minister was clear:

"The funds can withstand, but we now have a serious problem before us, precisely because of the uncertainty of the state’s financing, either from the troika, or from the international markets that our goal was”.

"In addition, having in our plans to raise the scheduled tranches from our lenders, but also from the markets, we intended to accelerate the disbursement of funds through the expenditure in the budget in order to contribute to the revival of the economy”, he noted.

"This too is a side effect," he stressed, "as we heard from the ECB that the access to this important tool of QE is available to member states with assessments over the investment limit. Today we don’t have this tool in our hands and the benefit that would be direct and substantial, we currently lose it”.

"We lose prospects”, he said, “as with just the ECB announcement, the yields of the Cypriot bonds recorded significant decline”.

Also, he pointed out, the ECB tool would contribute to Cyprus’ access to the market with low interest rates, to succeed - as is the desire of all - to be released from troika’s dependence.

The Finance Minister argued that the President of the Republic, with the proposal that was put before the party leaders, gave a way out, as the parliament would vote for the foreclosures law but, on the other hand, it would be excluded from the law on primary residence.

He added that the government, because of the troika’s delay to submit its final comments on the fifth legislation on the primary residence, sought and obtained from the international lenders to accept this proposal.

"The President’s proposal created the best conditions for a lifting of the impasse, especially when it was accepted by our lenders", he argued.

"It's surprising why the parliament has rejected such a proposal, assuming that all parties feel strongly in the protection of primary residence”.

Mr. Georgiades said that regardless of the parliament’s decision, the troika’s mission is expected to visit Cyprus next week, in order to assess the progress; under the new negative data, negotiations will come to nothing.

The reason, he explained, is because the assessment has stopped and the process remains in limbo as it does not create any prospect of state funding.

The Minister explained that the mission had decided to visit the island, expecting that the proposal of the President of the Republic would have been accepted and would create prospect of lifting the suspension of the assessment of the program.

The quarterly planning of the state has been overthrown, he said, as the next tranche cannot be disbursed.