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Cyprus tells central bank “don’t touch gold for your €400 mln”

13 December, 2013

The government of Cyprus has warned that the island’s central bank should find alternative ways to selling its gold reserves with a view to securing €400 mln, as prescribed by Eurogroup decisions, raising the issue, once again of the island’s gold reserves, held as collateral with the European Central Bank.
Finance Minister Haris Georgiades said on Friday that he discussed with the Central Bank of Cyprus the possibility to explore options in a bid to secure the funds.
Cyprus, which signed last March a €10 bln bailout plan with the Troika (EC, ECB and the IMF), agreed on a series of actions that would keep its public debt in check. A document issued by the Eurogroup on Cyprus’ estimated financing needs, envisages the allocation of future central bank profits of about €400 mln from the sale of its gold reserves, noting that this is subject to the principle of central bank independence and provided such profit allocation is in line with CBC rules.
"This is a decision by the Eurogroup. As was in case for the privatisations plan to secure certain sums, this is an obligation too," Georgiades said.
"I have communicated recently with the Central Bank, requesting them to examine alternative options. But in any case the decisions and the responsibility belongs to the Central Bank," he added.
The previous communist administration had sought to sell the island’s gold reserves with the aim of plugging its huge public sector deficit in order to avoid any other cutbacks in frivolous spending fro five years, but resistance at the time from the then-opposition parties and the former central bank governor forced the matter to close.