Statements by the Minister of Finance on the issuing
of a Cyprus Bond in international markets
The Minister of Finance, Mr Harris
Georgiades, gave a briefing today on the completion of the issuing procedure of
a Cyprus Bond in international markets.
MrGeorgiades, in his opening statement said
that as of today, Cyprus is back in the markets which means that we will be
able to refinance a substantial part of the existing internal debt, extending
its average maturity and achieving an even bigger and lower cost of servicing
in relation to the existing debt that we will pay off. He pointed out however that this does not
mean that the difficult effort of reforms and consolidation has stopped or has
been completed.
The Minister of Finance, responding to a
relevant question, said that “the target is for the next issue to materialize
so that what took place today is not an isolated act but another step towards
the regular presence of Cyprus in the markets, the longstanding ability of
Cyprus to fund its needs and that is how a strategy is formed and
materialized. A strategy that will bring
Cyprus - upon the completion of the memorandum in a final and permanent way
without dependencies - in the position
to be able to fund its needs.”
Asked whether today was just a test,
MrGeorgiades said that it was more than a test, that it was a very substantial
act with multiple gains for our economy but that without a doubt the aim is to
eventually return to full stability, meaning that these moves of constant debt
refinancing have continuity.
Regarding the benefits of this move to the
banking system, MrGeorgiades mentioned that the benefit of reinforcement and
liquidity will be immediate as well as the capital adequacy of banks and that
this reentry into the markets prepares the ground for a possible move of our
banks into the markets in an effort to reinforce their capital basis.
Speaking about Cyprus’ public debt, the
Minister of Finance said: “A year ago the mean cost of the Cypriot public debt
was at 4,3%. Until now it was slightly
above 3%. With today’s development, the
mean cost will certainly be under 3%. We
have borrowed with 4,75% and we will pay off an older debt which we inherited,
which has a nominal cost of 5,15% and much larger real cost. Consequently, it will be an immediate and
very important benefit both for public finances but as a whole for the existing
total public debt of 18,5 billion.”
Concluding, responding to a question on the
fact that Cyprus’ economy still remains in the garbage category and whether he
is optimistic that after this issue upgrading of the Cypriot economy will
follow, MrGeorgiades noted: “This fact precisely makes today’s move even more
important. The fact that despite the
upgrading that we have started getting we still remain on low levels and still
we were able to return to the markets and borrow, shows that in this aspect as
well the size of today’s success. And
without a doubt the fact will be recorded that the Cypriot economy which was
excluded from the markets and could not finance its needs, is now able to do
it.”
