Cyprus Editorial: Scraping the barrel

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This government is getting so desperate for cash that it is resorting to unconventional, or at least previously ‘untouchable’, sources to raise the necessary funds to pay down the huge public sector debt that is piling up.
Unsure what conditions will be attached to the new Russian loan and in the inability, for now, to find Chinese buyers for its 85% stake in the Popular Bank it so wants to offload, the communist administration wants to drain funds from the few profit making quangos, such as Cyta, to make them unfit for privatisation, with the telco’s staff provident fund expected to lend 150 mln to the state.
On Thursday, the government will raise 250 mln euros in a private placement of 3-month treasury bills straining the local financial institutions even further, despite demonising the “greedy” banks for seeking a quick buck on Greek sovereign debt in 2010.
Ironically, it was the political pressure that was exerted on Bank of Cyprus and Popular that partly forced them to invest heavily in GGBs, replacing older bonds that had matured when other simply exited the market and reduced their exposure to bonds.
So, the government has to tell us if it wants profit-making banks to stick around in order to prop up its T-bill issues or not.
And all this because the Akel-led regime refuses to issue casino licenses and the privatisation of some public-sector services or companies, and will never discuss abolishing or reforms to the burdensome cost of living allowance (unless the “evil” troika imposes it on us).
For now, a higher-interest Russian loan seems a safer bet, politically. But the longer the government delays slashing the civil service in order to make it a leaner, efficient and more productive machine, the costlier it will be for all of us – both the state as borrower and us taxpayers who have to dish out more dosh to finance the loans and bailout packages.