The Minister of Finance, Mr Harris Georgiades, had a meeting today,
at the Ministry, with the President of the Eurogroup, Dutch Finance Minister, Mr
Jeroen Dijsselbloem. After the meeting
Messrs Georgiades and Dijsselbloem made statements to the press.
In his opening statement Minister Georgiades noted the
following:
“It is a great pleasure for us to have the President of the Eurogroup
here in Nicosia today. Obviously the opportunities for contact and cooperation
are very frequent. But his presence here in Nicosia, more or less a year after
the climaxing of the problems of the Cypriot economy and the commencement of the
efforts to reform and remodel the Cypriot economy, is important; Both for
symbolic and substantial reasons.
We had the opportunity to discuss the progress of the Cypriot
programme. We have discussed the efforts to consolidate public finances which
are under control, we have gone through the ambitious list of structural reform
that will essentially lay the foundations for a much more viable economic model
for Cyprus. All the reform issues are open and in the process of implementation.
And we have of course discussed the progress as far as the recapitalization, the
restructuring and the reform of our banking sector.
As I have said to the President of Eurogroup, the Cyprus Government
and people are ready, willing, committed and able to do everything that is
necessary to fix the Cypriot economy and to carry it ahead. Not for the purpose
of satisfying the Eurogroup but for the purpose of serving the interest and the
prospects of Cyprus and its people.”
For his part, Mr Dijsselbloem stated the following:
“It is approximately a year ago since we took top decision on the
programme for Cyprus, on the measures that were necessary in view of the strong
crisis that came out of the banks and had effects on the whole economy of
Cyprus. I am here today to share my support and admiration for the work that you
and your Government have done and also to underline that we fully realize the
effects that the measures have had on the short-term economy and the lives of
the people here in Cyprus. These are difficult times. They are difficult yet
inevitable measures to go through and you are taking those. And as you said you
are not taking them to please Europe or the Eurogroup but because you feel that
they are necessary to once again strengthen the economy of Cyprus and therefore
take hold of the future of your country in your own hands.
I fully support you. The Eurogroup stands behind you and the measures
that you are taking. The way you are fulfilling all the commitments from the
programme deserves our support. I think there will be difficult times ahead and
yet also there will be a new prospective for the economy and therefore the
people of Cyprus. The economy of Cyprus has shown to be dynamic and flexible,
and therefore I am optimistic that Cyprus will recover within a short period of
time, especially if I take into regard the steps that you are taking now. Those
are necessary and will show and bring new perspective for Cyprus and its
economy.”
The Minister of Finance, responding to a question on the developments
in Russia and Ukraine and asked to say whether Cyprus’ stance on the issue could
have a negative impact on its economic reform course, said: “It is a fact that
Cyprus has enjoyed excellent relations both with Russia and Ukraine. But let me
say very clearly that our stance is not one which is being determined by narrow
self-interests, especially not financial ones. These are issues of principle
that are at stake and this is what determines the stance of the Cyprus
Government. We are member states of the European Union and it is very important
that the EU as a whole has a strong and unified voice when it comes to such
issues that create risks to the stability and prospect for cooperation. This is
what should guide the stance of all of us. We should work together for
establishing peace, stability and prospects for cooperation. Apart from that we
are not particularly concerned that the Cyprus economy will be negatively
impacted by the developments. Once again our primary interest is to see the
establishment of stability and the rule of law in the region.”
To a question on the situation in Greece, the Eurogroup President, Mr
Dijsselbloem, said: “I feel a little uncomfortable, I am in Cyprus today and I
am determined to spend all of my time on Cypriot issues, but tomorrow in the
Eurogroup we’ll talk about the developments in Greece on the basis of the Troika
reports so we’ll hear from the Troika where we are at. Of course the good news is that, as I
understand, a law was passed last night in the Greek parliament and the Troika
will look into the details of that to see whether that is substantial enough to
deliver on the commitments. Of course I
am worried about political stability but I am worried about political stability
in all of the Eurozone countries because it is a crucial factor even in my own
country to push forward on the issues that are on our agenda. If you want to push forward on the reforms
that are necessary, in all the Eurozone countries basically, you need a strong
political support. Political stability
is crucial. But we’ll go into that
tomorrow.”
Responding to a question on the haircut of last March, Mr
Dijsselbloem said: “If I had to go back
to the decision that was taken, I think that it was very harsh but it was also
inevitable in view of the specific situation in the banking sector in Cyprus.
So as you know we considered different
options but this option that came out was, in the given circumstances,
unfortunately inevitable. As you know,
over the last year we worked very hard on the banking union to make sure that
this kind of situation, this kind of unsustainable banking sector situation will
not arise in the future, that we will have a strong supervision in all of our
countries, that we will have higher capital requirements, that we will have
resolution frameworks that we will set up equal in all countries so all of that
is put in place now as we work on the banking union. So this is the situation and the problems
that came from the past and were actually dealt with by the then new Cyprus
government and with the strong cooperation of the Eurogroup.”
To another question the Minister of Finance said: “The problems were not those of March but
with the climaxing of the problem we would have done, if we had the chance, many
things differently during the past two or three years and if there is a lesson,
the lesson is for the need to act in time, well ahead of the problems, before
they reach proportions where everything becomes inevitable and
controversial. Effective, timely action
is definitely needed and that should be the lesson for all of us, and Cyprus is
actually paying the penalty for failing to act well in time when the clouds of
the crisis were visible but obviously were ignored at the time. Even the cost of
the inevitable reforms and consolidations that we are going through today would
have been less if the effort had started sooner. And this is what we are trying
to establish through the banking union.”
Asked whether he would consider a haircut again, Mr Georgiades said
“I would do everything possible to prevent such a need from arising again.”
Invited to comment on the peace talks underway in Cyprus, Mr
Dijsselbloem said: “It is obvious that the EU very much supports the talks that
are going on right now and hopes for a positive outcome on that, and I think it
would also help to strengthen the trust in the economy in the future for the
country as a whole. But we just have to
wait for the outcome. I know the
President is putting a lot of energy and time into this process and of course we
support these efforts. They certainly
contribute to optimism for the future.”
To a question regarding capital controls, Mr Georgiades said: “These
controls were yet another inevitable side effect of the decision that had been
taken, but the good thing is that gradually we have been able to relax them and
essentially very few domestic restrictions apply today and they will all go very
soon. External controls are also
relative. There is no restriction when
it comes to normal business transactions, there are no restrictions when it
comes to new money coming in to the economy and obviously move it out, the
banking system is gradually stabilizing and in an equally gradual rate the
restrictions are being lifted.”
On the same issue, Mr Dijsselbloem said: “I think the lifting of the
capital controls is firstly a decision of the Central Bank of Cyprus and the
Government to step by step take away these capital controls. I think the outline of the plan is clear
there. Of course the essential
condition that has to be fulfilled is the economic stabilization of the
situation and bringing back the trust in the financial sector. So all the steps that are being taken – the
restructuring, the recapitalization etc. – are all contributing to bringing back
the trust in the system and that will allow the Cypriot authorities to take away
these capital controls. I don’t think
that there needs to be further steps from the Eurogroup or the Eurozone. I think that the programme is being very
effective and has really all the instruments as well as the financial means to
support Cyprus so the programme is well designed and will be very effective,
especially as I know that the Cyprus government is fulfilling all its
commitments. So I think the trust will come back, simply because all the
measures are being put into place and the recapitalization and restructuring are
being performed as planned, which is very important.”
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