Cyprus Mail

Pledge of EU aid boosts Cyprus credibility

By Peter Stevenson

PRESIDENT Anastasiades’ argument that practical difficulties exist in implementing the terms of the bailout has been acknowledged by European leaders the government spokesman said on Saturday.

Speaking to reporters at the Presidential Palace, Christos Stylianides said the inclusion of a paragraph relating exclusively to Cyprus in the EU Council’s conclusions on Friday demonstrated Cyprus’ credibility in light of the bailout agreement.

“Reliability is the key to cooperation with the EU and credibility is the key if Cyprus is to overcome the financial crisis,” he said.

Stylianides added that the council’s conclusions essentially agreed that Cyprus would be treated in the same manner as other EU countries which receive financial support by calling on the European Council and Parliament to find ways of helping Cyprus.

“What is essential right now is we have the opportunity to receive funding from European programmes which can increase Cyprus’ cash-flow during this critical period,” Stylianides said.

Earlier yesterday the rating agency, Standard and Poor’s lowered its long and short-term sovereign credit ratings on Cyprus to selective default (SD) from ‘CCC/C’.

On Friday Fitch rating agency had also downgraded Cyprus’ long-term local currency Issuer Default Rating (IDR) to “Restricted Default” from “CCC”, following confirmation from the government that the exchange of a number of domestic law government bonds has been completed.

“We lowered our sovereign credit ratings on Cyprus to ‘SD’ after the government announced an exchange offer on a number of its local law governed bonds. In our opinion, the exchange materially changes the terms of the affected debt and constitutes what we consider a distressed exchange according to our criteria,” S&P said.

The Finance Minister Haris Georgiades was quick to point out on Friday that ‘selective default’ was a technicality and temporary and linked to the procedures of the bond swap.

The government spokesman said measures needed to be taken to improve the public mood and to help the country’s image and that the EU Council’s decision could help.

“Nobody claims that we have solved the problem of development this way, but considering the state of our economy, we need positive conditions and positive steps,” he added.

Opposition AKEL expressed their disagreement with the positive views of Stylianides, in statement made by the party’s deputy parliamentary spokesman, Stavros Evagorou.

“Unfortunately Friday’s decision by Fitch Ratings to downgrade Cyprus to ‘restricted default’ shows once more that we have reached a dead-end due to the signing of the MoU,” he said.

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