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Wednesday, April 3, 2013
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Bailout concluded, aid to flow in May Government says it has secured a ‘better’ deal than the initial MoU By Stefanos Evripidou
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HE GOVERNMENT yesterday clinched a deal with the troika on a €10 billion bailout programme with ‘better’ terms than the previous draft memorandum, said government spokesman Christos Stylianides. “This is a very important development which ends a very long period of uncertainty,” he said, adding that the conditions have now been put in place to inject life back into the economy. The deal, which requires ratification from eurozone finance ministers and national EU parliaments, will see Cyprus receiving a €10 billion loan, carrying an interest rate of between 2.5 and 2.7 per cent. It is repayable over a 12 year period after a grace period of a decade. The spokesman noted that the interest rate was much more competitive than the 4.5 per cent secured by former president Demetris Christofias for a €2.5 billion loan from Russia. “Unquestionably, the deal with the troika should have been completed earlier under much more favourable political and economic conditions,” said Stylianides. Despite the delay, “the situation is now normalising, stabilising, creating the conditions to restart the economy,” he added. Listing the improvements achieved by the government in the new bailout
deal, Stylianides said the government was able to protect Cyprus’ sovereign rights over the planning, exploitation and management of revenue from its natural gas, ensuring that the above remain in the hands of the state. Explicit references are included on the Cyprus Republic’s exclusive responsibility over its hydrocarbons, he said, adding that a provision for the troika to re-examine the programme was removed from the memorandum. Compared with the draft deal brokered in November by the previous government, yesterday’s agreement gave authorities additional room to reach a primary surplus by 2018, extending the period of fiscal adjustment by two years from the initial 2016. Stylianides argued that this allowed a “milder” form of fiscal adjustment, spreading out consolidation over five years and reducing pressure on the state. The provision for privatisations offers adequate timeframes, which also extend to 2018 from 2016. “This buffer allows for better planning and implementation under better economic conditions, which will also safeguard the workers,” he said. The government negotiated to save the jobs of hourly paid workers and contract teachers who were due to enter into unemployment under the old draft, by imposing “a
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Personnel from the American warship USS Kearsarge, which has docked at Limassol port as part of its tour of the Mediterranean and Middle East. Media were given a tour of the ship yesterday (CNA) SEE STORY PAGE 7
Sarris resigns to faciliate job of committee probing economy FINANCE MINISTER Michalis Sarris resigned yesterday after concluding a €10 billion bailout deal with international lenders in which the country almost overnight downsized its dominant banking sector and hit depositors with losses for the first time in the eurozone. Sarris, who was dispatched to Moscow last month seeking Russian aid as an alternative to across the board bank levies in Cyprus but returned empty-handed, said his main goal of agreeing a deal with lenders had been accomplished. But he said it was also appropriate to resign since his previous role as
chairman of the Popular Bank, or Laiki - the island’s second largest lender wound down under terms of the bailout - was also likely to come under scrutiny. “I believe that in order to facilitate the work of (investigators) the right thing would be to place my resignation at the disposal of the president of the republic, which I did,” said Sarris, who headed Popular for a few months in 2012. President Nicos Anastasiades yesterday appointed a three-member committee of inquiry to investigate the causes of the crisis. Sarris will be replaced by Haris
Georgiades, who has held the labour ministry post in Anastasiades’s fourweek administration. The Commerce Ministry’s permanent secretary, Zeta Emilianidou, will, in turn, replace Georgiades. Both will be appointed at a ceremony at the presidential palace this morning. In a written statement, Anastasiades thanked Sarris for his “valuable services during the course of the difficult negotiations with the troika”. He also praised the former World Bank economist for demonstrating a “high political ethos and political sensitivity” regarding the reasons given for his resignation.