Cyprus Mail

No delay in pushing through bailout terms, Eurogroup warns

By Maria Gregoriou

JEROEN Dijsselbloem, the president of the Eurogroup, has insisted that Cyprus cannot delay in implementing the terms of its bailout deal with international lenders.

In a letter to President Nicos Anastasiades which was made public on Wednesday, he said Cyprus must deal urgently with the issues facing the financial sector.

“The situation in Cyprus does not allow complacency or delay on the pressing issues facing the financial sector,” his letter said according to the website Stockwatch.

He was responding to the letter sent by Anastasiades on June 6 to European leaders in which he urged lenders to provide a long-term and sustainable solution to liquidity issues faced by Bank of Cyprus, which absorbed assets from Laiki Bank.

On Tuesday Anastasiades reiterated that Cyprus was not trying to wriggle out of terms of the EU/IMF bailout, but that some provisions of the deal needed tweaking to address problems in its battered banking sector.

“Every effort will be applied so our positions are met with understanding by our partners… We are not seeking re-negotiation but an adjustment of certain measures,” he had told a lunch on Tuesday yesterday to mark the end of the Irish EU presidency.

But Dijsselbloem said Anastasiades should communicate clearly to the Cypriot public about the strategy being applied to the banking sector. This will ensure the people’s trust, he was quoted as saying.

“It is important we avoid controversy about the dedication of the Cypriot government to assume its responsibilities under the Memorandum of Understanding, even before the programme has had the opportunity to show any results,” he warned.

“A clear communication channel with the public is very important to stabilise confidence at this critical stage,” the letter said.

Dijsselbloem said he recognised that the government remains committed to the deal and stressed that Eurogroup supports Cyprus and it has proven so by giving the country a loan and also by monitoring the situation.

He also assured the president that the terms of the bailout will be implemented.

In his letter, Anastasiades had suggested that part of the ECB assistance liability be converted into long-term bonds and transferred to a special vehicle. He also urged the ECB to restore the counter-party status of Bank of Cyprus, and an easing of capital controls, initially imposed to avert a run on banks.

Anastasiades is meeting with German Chancellor Angela Merkel and other leaders at the EU summit today and tomorrow. He hopes to voice his concerns about the bailout and seek solutions to solving the banking sector problems.

Cyprus was forced to shut down Laiki bank and seize deposits for €10 billion in aid from the International Monetary Fund, European Central Bank and European Union in a bailout in March.

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