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Cyprus

Georgiades: inconceivable to oppose solution on financial grounds

It would be inconceivable to oppose a Cyprus solution on the grounds of financial difficulties, Finance Minister Harris Georgiades has said, adding that would be equally problematic to disregard the need for proper preparations in order to have effective arrangements in place following a Cyprus settlement.

In an interview with CNA, Georgiades referred to his contacts in Washington on the sidlines of the 2016 annual meetings of the International Monetary Fund (IMF) and the World Bank. The meetings focused on the progress of the Cypriot economy, following the termination of the country`s consolidation programme, and on the financial aspects of a Cyprus solution.

The minister concludes his contacts later on Sunday, with a meeting with representatives from the credit rating agency Fitch. Georgiades also met with S&P and Moody’s while in Washington.

The meetings are being held in order to brief the rating agencies on the performance of the Cypriot economy, especially after the conclusion of the Memorandum, aiming “obviously” at a ratings upgrade, Georgiades said. He also pointed out that the aim was to reach the investment grade, as Cyprus was now two steps lower.

“There has been significant progress”, said the minister, adding however that the effort was to cover the remaining distance in order to be assigned investment grade.

Georgiades also met with Poul Thomsen, the Director of the IMF`s European Department, in the backdrop of IMF`s upgraded projections concerning the Cypriot economy. The Fund estimates 2.8 per cent growth in 2016 and 2.2 per cent in 2017. The ministry`s projections for next year are higher.

Georgiades also met with Ramin Toloui, the Treasury’s Assistant Secretary for International Finance with whom he discussed the financial aspect of a Cyprus solution, as he did in part with the IMF.

“There has been a common understanding that there are very positive prospects for the Cypriot economy following a Cyprus settlement, but there are some very clear and specific preconditions that need to be met”, Georgiades said. He explained that there must be full compliance with all rules and obligations deriving from EU and Eurozone membership.

He further conveyed the message to his interlocutors that the effective arrangements that need to be in place immediately after a solution in Cyprus, need to be specified, agreed and implemented.

Both through negotiations, as well as through international contacts, the government is working to prepare the economy, in order to be ready for reunification, he underlined. This effort aimed at lessening any difficulties and to maximise prospects, he added.

The IMF is conducting a series of reports on the Cypriot economy, which are still in progress. Among the issues pending, is the review of the banking sector that operates in the north of the island.

Asked if there were any discussions on post-solution financing, the minister gave a negative reply.

Other contacts held in Washington included a meeting with Suma Chakrabarti, the President of the European Bank for Reconstruction and Development, and Danny Alexander, the former Treasury Minister who is now Vice President of the Asian Infrastructure Investment Bank (AIIB) – an initiative that Cyprus wants to join.

Georgiades said he expected the process of becoming member of the AIIB to be concluded in the next few months, by early 2017. This, he said, would strengthen the country`s geopolitical position. “Cyprus is a European country, but also an international financial centre, which has strong ties with the Middle East region”, the minister noted and added that AIIB membership would strengthen Cyprus` role.

AIIB is dealing with large infrastructure projects in energy and transport, in Asia.



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