Eurozone exit will spell collapse for Cyprus

Cyprus president Nicos Anastasiades said that his government has considered all possible scenarios and that any decision to exit the eurozone will lead to the collapse of the economy.
Addressing a news conference at the Presidential Palace to mark the first four months of his administration, Anastasiades said that the government wants to see the banking controls imposed following the Eurogroup decisions in March lifted and that the conclusion of the restructuring plan at the Bank of Cyprus will result in stability of the economy and growth.
On Saturday, however, Moody’s Investor Services said in a report on Cyprus that the economy’s default and eurozone exit was still highly likely.
Inspectors from the Troika of international lenders – ECB, EU and IMF – will return to Cyprus to review all reforms and measures leading to a cut in public spending, including the vast civil service payroll.
President Anastasiades told the press briefing on Friday that wage cuts of 500 mln euros in the 2014 budget had already been agreed by the previous government last November. He also said that there is room for further savings if we reduce some of the state expenses such as the rents paid to house public services.
He also hoped that there would never be a need for Cyprus to sell its gold reserves and that the island’s Central Bank would be responsible for such an issue.
Asked about the attempts to secure a further loan deal with Russia following the Eurogroup decisions, Anastasiades rejected criticism that Cyprus was unprepared, adding that the proposals put forward were very specific.
Regarding his relations with the Central Bank Governor, the president said that he is not in conflict with him, that the Governor quite often has different views, but there is no rivalry between them.
In a question whether Cyprus would consider to pre-sell future natural gas contracts, the president explained out that “this cannot happen before we have the results of the second confirmation drilling [by Noble Energy in Block 12] next October.”
Referring to the Cyprus problem, Anastasiades said that he recently had a meeting with Turkish Minister for European Affairs Egemen Bagis to whom he repeated that the Annan peace plan, rejected by the Greek Cypriots in a referendum in 2004, cannot be put before us in the future and that he briefed the National Council on that meeting.
He also said that the National Council, the top advisory body to the president on the Cyprus problem, will resume in a two day session on July 16-17 and will discuss the Cyprus issue and the possible resumption of the talks next autumn.