With a little effort … Cyprus problems can be overcome

Cyprus faces serious economic problems but they can be overcome with collective effort, central bank Governor Athanasios Orphanides said on Wednesday.
"I am optimistic that with the right actions and effort by all we will pull through this," Orphanides told reporters after a meeting with Finance Minister Kikis Kazamias.
They were Orphanides' first public comments since warning authorities in a July 18 letter that Cyprus ran the risk of requiring an EU bailout unless urgent action was taken to shore up its finances.
Cyprus has seen its borrowing costs on international markets surge on the back of repeated downgrades by ratings agencies because of fiscal slippage and exposure of its banking sector to Greek debt.
A July 11 blast which destroyed the island's largest power station amplified economic woes, wiping out growth forecasts to around 0% this year. The crisis forced a wide cabinet reshuffle and the appointment of Kazamias, a German-trained economist.
Both he and Kazamias said they would engage on a regular basis to discuss economic issues, which is a great improvement from the sour relations between the central bank and the communist government. Orphanides and former Finance Minister Charilaos Stavrakis had little contact.
"We acknowledge the seriousness of the situation …(We will) work together and see what kind of action we can take to improve the situation and avoid the worst," said Orphanides, a member of the Governing Council of the ECB who was a senior adviser at the U.S. Federal Reserve before his appointment in Cyprus in 2007.
Orphanides did not elaborate or take questions from reporters.
Authorities last week unveiled a 750 mln euro two-year austerity package designed to wrestle down a deficit to about 5.5% of GDP this year and below 3.0% in 2012.
The package, that includes tax hikes, a 2% VAT increase but no cutbacks on the bloated civil service, needs to be approved by parliament, now opposition-controlled after the departure of the junior partner from the centre-left governing coalition on August 10.