Cyprus Mail

Anastasiades: no scandal ‘old or new’ will be hidden (Update 2)

President Nicos Anastasiades pressed home his government’s determination not to tolerate or hide any scandals “old or new”, as he recapped three years of his presidency that has seen a number of high-profile public officials hauled up for graft.

During his televised news conference, Anastasiades outlined the government’s fiscal achievements, touched on the Cyprus issue and defended often unpopular policies, joking that he had sat back and taken the criticism patiently for three years.

Asked about the series of scandals that have surfaced involving embezzlement of public monies, the president said these malfeasances occurred during a time period prior his administration, and reiterated his determination to crack down on corruption.

“We have demonstrated that we are determined to stamp out corruption,” he said. “We are determined not to accept any new scandal or hide any new or old [scandals]. It is no coincidence that for the first time since the establishment of the Republic, so many well-known figures were not only brought before the courts, but also sent to the central prison.”

To a question as to whether the scandals might have played a part in Cyprus failing to attract the level of foreign investment that it could, Anastasiades said this was a good reason to  fight scandals because everyone would realise that no one could be blackmailed by anyone else.

Although the president conceded that foreign investment was not as high as would have been desired, he said it was also “not insignificant”. He cited a number of examples, such as the privatisation of the commercial operation of Limassol port (€44 million immediate revenues) and a €230 million investment for the construction of the Ayia Napa marina.

He also said that in a matter of days reforms to the government’s investment strategy to stamp out bureaucracy would be announced.

Anastasiades sought to play up his government’s achievements, but during the Q&A newsmen pointed out repeatedly that although the cold data may be flourishing, real people still face economic hardship.

In particular, he was called out on his boast that unemployment has declined, with one reporter suggesting it was simply because the labour force has shrunk as young Cypriots migrate in search of better prospects.

The president, who had evidently done his homework for the presser, noted that in 2013 some 25,000 people emigrated from Cyprus, of whom only 3,579 were Cypriot nationals. By contrast, in 2014 the number of Cypriots migrating had dropped to 2,106.

He cited also data showing that the number of people dependent on food banks fell from 14,000 to 4,000 currently, of whom half are Cypriot nationals.

Car sales are up, as are sales of construction materials, he added.

“I have been patient for three years, not speaking, and taking the criticism,” Anastasiades joked.

Asked about the strikes in essential services, most recently by the nurses, the president said. “The right to strike is sacrosanct, provided it is always practiced in moderation, and especially when it does not project the image of extortion given, especially by those serving in essential services,” he said.

Touching on the Cyprus issue, Anastasiades said he did not expect Cyprus would need a new bailout if a settlement was reached. “I don’t see how it would be possible for us to be led into to a new Memorandum of Understanding, if one takes into account there will be transitional periods and safeguards built in (to a solution) so there will be no economic oscillations,” he said in response to a question.

Running down the government’s achievements prior to the Q&A, and going over old ground, he said that faced with an unprecedented financial meltdown in March 2013, the new government had to accept a tough deal to prevent the economy from going over the precipice.

“Under these circumstances, and with a bailout agreement pending, the new government was being called upon to manage an unparalleled crisis, and we had to choose between the complete collapse of the state and the banking sector or taking a decision of responsibility in order to limit as far as possible the risk of a disorderly default,” Anastasiades said during a news conference recapping his administration’s track record three years since coming to power.

Prior to March 2013, the president recalled, Cyprus’ creditworthiness had been downgraded a total of 22 times by credit rating agencies.

At the same time, the country’s two systemic banks – Laiki Bank and Bank of Cyprus – were on “the respirator” and needed a combined €7.5 billion to stay afloat. And the state’s cash reserves would last only a month.

The economy was in deep recession, with the unemployment rate already in March 2013 having soared to 14.3 per cent. By February 2015, the jobless rate rose to 16.6 per cent, dropping to 12.6 per cent in February this year.

Given the dire state of affairs, Anastasiades said, the new government had to swallow the bitter pill and agree a bailout deal with its European partners and international creditors, thus averting the far worse option of total economic devastation.

“But I repeat, the Eurogroup decision was foisted on us,” the president noted.

Anastasiades ran through the steps his government took to stabilise the economy in the wake of the ‘bail-in’ which saw billions in people’s savings wiped out, right up to the present day, on the occasion of Cyprus’ exit from its economic adjustment programme.

Fiscal discipline measures, primarily by reining in the state payroll, included reducing the number of civil servants, restricting overtime pay and abolishing tax-free pension benefits, as well as shutting down five state-run enterprises which were operating at a loss.

Combined with a restructuring of the public debt, these measures resulted in balancing the budget as of 2014, with a primary surplus of 2.5 per cent, and this without having imposed any new taxes or pay cuts, stressed Anastasiades.

The insolvency package and the restructuring of the cooperatives were some of the highlights in the drive to restore the credibility of the banking sector.

Emergency Liquidity Assistance (ELA) to Cypriot banks, standing at €11.4 billion in February 2013, shrunk to €3.4 billion during the first quarter of this year.

The third pillar concerned steps to jumpstart the flagging economy, such as building and tax incentives, slashing immovable property transfer fees by 50 per cent until December 31 this year, and incentives to foreign nationals to choose Cyprus as their tax residency through the non-domicile programme.

Noting that his government cannot take all the credit for the reversal, Anastasiades thanked both the opposition parties for working with the administration in getting crucial reform bills passed, as well as trade unions for showing restraint during the three years.

On the privatisation of the state telecoms corporation, CyTA, Anastasiades seemed his government is still keen on finding a private investor, but that the matter would be revisited after the new parliament reconvenes following May’s legislative elections.

And the privatisation of the state power company has been pushed back.

Anastasiades will be holding another press conference next Thursday in which he will be going into his administration’s work in more detail.

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