Cyprus Mail

Parties on the fence over return to markets

By Angelos Anastasiou

THE prospect of Cyprus’ return to international markets by the end of the month appeared to have left political parties on the fence yesterday as positive comments were accompanied by shots at the government for the state of the real economy.

“It is expected that by the end of this month Cyprus will return to international bond markets, a full year before the time initially estimated,” President Nicos Anastasiades declared on Tuesday night.

This was promptly confirmed by the finance ministry, which issued a statement saying that five investment behemoths – Deutsche Bank, Goldman Sachs International, HSBC, UBS Investment Bank and VTB Capital – had been commissioned to organise road shows aiming at convincing investors around Europe to participate in a possible Cyprus bond issue.

“A euro-denominated transaction may follow, subject to market conditions,” the ministry’s statement said.

But opposition parties were less inclined to the government’s enthusiasm. Former junior government-coalition partners DIKO urged the government to focus on the bigger picture.

“Returning to the markets is a positive step, but not the ultimate goal,” DIKO said. “The ultimate goal is to restart the economy, growth, combating unemployment and raising people’s standard of living.”

Similarly, socialist EDEK warned of the risk of missing the forest of improving conditions for the people for the tree of tactical economic manoeuvring.

“We agree that the reduction in the Cyprus bond yields is a strong indicator of improved investor sentiment,” EDEK said in a statement. “However, reductions in bond yields mean nothing to the citizens of Cyprus who face tragic problems. Instead of celebrating we should examine ways of combating unemployment and reducing non-performing loans.”

The Citizens’ Alliance agreed with the government’s effort but felt more could have been done.

“Before returning to the markets, the government should have finalised Cyprus’ energy planning and its timelines, in order to establish our country’s growth prospects,” the Alliance said in a statement.

The Greens thought Cyprus’ return to the markets was a “positive development” but called for transparency in how the funds raised would be used.

“As the Green Party, we expect the government and the finance minister to explain what the €500m will be used for,” the Greens said. “Trying to foster confidence abroad is one thing, but maintaining the illusion of improving an economy mired in debt locally is quite another.”

But the list of fence-sitters did not feature the main opposition party AKEL, which came out all guns blazing against the positive spin that the government tried to put on the move. Still, the communist party fell short of offering an actual position.

“For starters, when a country remains restrained to a Memorandum [of Understanding] that drives its people to complete humiliation, no celebrations are warranted,” AKEL’s Stavros Evagorou said. “How can a country celebrate its return to the markets when its unemployed have reached 80,000, food banks serve some 45,000 of our fellow citizens, a few thousand are at risk of losing their homes and when austerity and cuts have reduced households’ purchasing power by 30 per cent?”

Ruling DISY’s spokesman Prodromos Prodromou lashed out against AKEL’s criticism by assigning the blame for the economy’s dire state to the communist party.
“Nobody has been celebrating,” Prodromou said. “[DISY] has said that returning to the markets a year and a half earlier than expected is a success – and it is, because the policies adopted from 2008 to 2011 drove our country out of the markets.”

Prodromou also argued that the government is merely trying to resolve problems created by the previous government.

“AKEL criticised the policy of borrowing. They seem to forget that the previous government doubled public debt to more than €15bn, and left a legacy of another €10bn in the form of the Troika loan,” he said.

“They had best abandon partisan rock-throwing,” Prodromou said, and concluded his statement with yet another barb. “We neither want to celebrate, nor to face bankruptcy as we did at the end of 2012,” he said.

Even Archbishop Chrysostomos thought it appropriate to weigh in on the issue, arguing that if the Church’s finances were anything to go by, the Cyprus economy is indeed on the way to recovery.

“We are a small economy, and small economies can easily rebound,” he said. “Seeing the Church’s finances, which are better this year compared to last year, and hearing Europe congratulate our government, these are all good signs. I am optimistic that financial hardship for our people will soon be a thing of the past.”

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