By Stelios Orphanides
Finance Minister Harris Georgiades said he is optimistic about the prospects of the economy and said Cyprus would not require a new bailout package after completing its programme in two months time, even if it fails to privatise the state-owned telecoms company CyTA.
Georgiades who was commenting in a telephone interview on Monday said that he was also confident that government would post a 2015 fiscal deficit of 0.9 per cent.
“It is a much different situation that we have today, much more positive and favourable with respect to the banks, the public finances and the prospects of the economy in general as well as the confidence in the country’s trustworthiness and creditworthiness,” Georgiades said.
The finance minister who met on Monday with Thomas Wieser, the chairman of the Euro Working Group, a body that prepares the agendas on the meetings of the euro area’s finance ministers collegium, also known as Eurogroup, said that the overall picture for Cyprus’s progress in implementing its adjustment programme agreed in March 2013 in exchange to €10bn in bailout funds is “positive”.
“We want to finish the programme with full marks,” the minister said adding that also Wieser “believes that it would be better to complete not just the review but also the programme with another full marks”.
Cyprus’s programme expires in March and the euro area’s finance ministers may decide to disburse another €400m tranche in bailout funds earmarked for Cyprus, provided Cyprus completes certain prior actions. These include the bill for the break-up of state owned power producer Electricity Authority of Cyprus production and transmission operations in two separate entities (which the council of ministers passed on Monday defying the union opposition), the implementation of legislation on loan securitisation, currently undergoing legal vetting, and the creation of CyTA Ltd, the company which will take-over the operations of the Cyprus Telecommunications Authority.
“We comply with two out of the three and that of CyTA remains pending,” he said in reference to public comments made by DIKO lawmakers who said they will vote down the CyTA bill. “The time that can be used to meet this is until mid to end February”.
The eighth review of Cyprus’s programme is on the agenda of the Eurogroup’s January 14, meeting. The body is scheduled to discuss the ninth review on March 7. Georgiades said on various occasions in recent week that a decision of the parliament to vote down the CyTA bill will be regrettable “but not the end of the world”.
“We are used to a good record and it would be good for the reputation of Cyprus to get another full marks,” he said. “It is not that much the cash that matters, but the reputation. We have to preserve our good record”.
The finance minister added that the cabinet’s decision to pass the bill on the break-up of the power company is an important structural reform and a first step towards increasing competition on the electricity market.
“We want the market to open up,” he said. “We see this as a structural, not as a revenue generating (reform) and the troika has the same opinion. This move will really open the door to competition”.