It is our duty to disengage Cyprus from the Troika, House President Yiannakis Omirou said here today, referring to the terms of a bailout agreement for the country with the European Commission, the ECB and IMF.
Addressing the annual conference of the trade union of civil servants, in Nicosia, Omirou said that there should be no hesitation or ambivalence between accepting a humiliating treatment and examining another option.
He went on by saying that the recent Eurogroup decision on Cyprus, on March 25, is “exhausting” Cyprus, imposing the debilitation of its two largest banks. In combination with other measures by the Troika, Omirou warned that there is the risk of heading towards recession, high unemployment and poverty.
This attitude, Omirou noted, is inevitably linked to the future handling of Cyprus’ natural resources and of a future Cyprus solution.
He pointed out that there are “enormous responsibilities”, mainly in the banking sector, for the present condition of the Cyprus economy and added that all accountable must be brought to justice.
Finally, Omirou praised civil servants for their continuous contribution to the consolidation of the Republic, adding that historically they have accepted wage cuts during critical times, both after the 1974 events and more recently, during the financial crisis.
Cyprus has been divided since 1974, when Turkish troops invaded and occupied its northern third.
Excluded from international markets, Cyprus applied in June 2012 for financial assistance, after its two largest banks sought state aid, following massive write downs of their Greek bond holdings amounting to €4.5 billion or 25% of the island`s GDP, as a result of the Greek sovereign debt haircut.
Eurogroup reached an agreement with Cypriot authorities on March 25th on the key elements necessary for a future macroeconomic adjustment programme of 10 billion euros.
A haircut of around 40% on deposits over 100.000 euro at Cyprus’ largest bank, Bank of Cyprus will be imposed, whereas Cyprus Popular Bank will be resolved in a good and bad bank immediately – with full contribution of equity shareholders, bond holders and uninsured depositors – based on a decision by the Central Bank of Cyprus, using the newly adopted Bank Resolution Framework. CPB deposits of up to 100.000 euro are guaranteed.
The program also provides for downsizing of the public sector and privatizations.
