President Demetris Christofias has said he disagrees with the Troika (EC, ECB, IMF) on matters relating to semi-government organizations and natural gas.
Speaking at the inauguration of the new community building in the village of Psevdas, in Nicosia district, on Tuesday, the President said that given that part of Cyprus continues to be under Turkish occupation it is pivotal that the state controls important sectors such as natural gas, electricity, ports and telecommunications.
“We all want a more effective state. It’s one thing to have a more effective state and another to have a practically non- existent state, which will leave citizens unprotected in a world where the weak survive with difficulty,” he said.
The Troika delegation, in Cyprus for talks on the terms of a bail out package, argues that revenue from natural gas exploitation in Cyprus’ exclusive economic zone must go towards debt repayment. The government maintains that this revenue must be deposited in a special fund, part of which will be allocated to growth and infrastructure projects, another part will be destined for future generations and another part will go towards repayment of the country’s debt to its international lenders.
On the semi-government organizations, the Troika seeks to privatize those organizations which make a profit. The government disagrees with such a prospect and has drafted a plan to privatize non profit making semi government organizations.
Other thorny issues under discussion between the Troika and the government relate to the cost of living allowance (COLA), with the former demanding a three year freeze and the latter proposing allocation of the allowance once a year, instead of twice which applies now, and withholding COLA if the economy is in recession.
Cyprus’ international lenders also want austerity measures amounting to 1.2 billion euro and not 975 million which the government proposes in late July when it applied to Europe for a bail out.
The President said he disagrees with any noting of minimizing the role of the state and by extension the role of society and the citizens. “We perceive the state as a steam engine for growth, the protector of the weak and the guardian of national and collective interests,” he added.
Referring to the village community building, he said the government supports local administration projects which aim at improving the quality of life for the residents. The building cost €889,000.
A Troika mission is in Cyprus and negotiations are ongoing with the government with a view to reach an agreement on a rescue package.
Cyprus on June 25 applied for financial assistance from the EU bailout mechanism (EFSF/ESM) to rescue its two largest banks which sought state aid, following a massive write-down of their Greek bonds holdings as a result of the Greek sovereign debt haircut.
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