By Angelos Anastasiou
CYPRUS has a working plan that is already bearing fruit and must be continued, Finance minister Harris Georgiades said yesterday after meeting with troika mission chiefs, who expressed reservations regarding the island’s commitment to sticking to the terms of the programme.
As announced last week, the troika team arrived for deliberations this week with Georgiades and Central Bank governor Chrystalla Georghadji.
Jakob Friis, who replaced Maarten Verwey as mission chief for the European Commission, Mark Lewis, who replaced Delia Velculescu as IMF delegate, and Francesco Drudi from the European Central Bank, were seen by Georgiades at his office at around 10 am.
On the table was the deadlock created by the parliament’s decision to extend the suspension of tougher foreclosure legislation from January 30 to March 2, a decision that has prompted the IMF to freeze the next tranche of a bailout loan until the law is enforced.
As a result, the fifth review of Cyprus’ economic adjustment programme remains pending, meaning no further loan funding can be released until the issue has been settled.
Speaking to reporters after the meeting, Georgiades said the economic adjustment and reform programme works and must continue to be implemented.
With regard to the country’s non-compliance with the programme’s terms, Georgiades expressed the hope that in the coming days or weeks the deadlock will be broken “on the basis of reason, not hyperbole”.
“I had the chance to update the troika on progress in connection with the huge effort to reform and consolidate the economy”, said the Finance minister.
“We have a programme that works, as we have documented today before the Troika”, he added. “It has produced tangible results, and should thus be continued”.
But, he warned, Cyprus has “not yet traversed the distance required for anyone to say that we have overcome the challenges”, though it is “on the right track”.
“The economy records continuous improvement, unemployment is decreasing for the first time in years, public finances are such that require no new levies, which was standard practice over previous years, and the banking system has stabilised, despite challenges”.
Georgiades noted that Cyprus is in a “correction course that must be continued”, which serves the dual goal of an economic turnaround and the restoration of the country’s credit rating, a development that would “ultimately render the Troika’s presence unnecessary”.
Asked to comment on the issue of the fifth and final bill comprising the insolvency framework – not yet submitted to parliament and cited by opposition parties as the reason for the suspension of foreclosure law – Georgiades expressed the hope that in the coming days or weeks the government will find a way out of the stalemate.
The freezing of Cyprus’ economic adjustment programme has meant the government’s short-term planning will likely be thrown off course, with a Finance ministry source cited by state radio claiming that the state needs to refinance almost €3bn worth of sovereign debt in 2015, but recent developments have cast doubt as to whether this target is achievable.
According to the Cyprus News Agency, Georgiades presented the Troika mission with a chart depicting progress made since the second half of 2013 to the end of 2014, in a bid to corroborate his claim that the programme is yielding results.
But the representatives of the international creditors expressed reservations with regard to the country’s policy of committing to the programme’s terms, citing the parliament’s decision to suspend foreclosure law.
The same sources said that although Cyprus is facing no imminent liquidity issues, the delay in programme reviews and the subsequent delay in releasing loan tranches pose a threat to the implementation of budgeted growth projects.
However, they confirmed they will be available to return to the island as soon as the prerequisite reforms have been executed, in order to carry out a proper review and move the process forward.