.jpg)
Cyprus, bailed out by the Troika of international lenders in 2013, is about to exit the ‘adjustment programme’ in March, just as the economy has resumed its growth path, Finance Minister Haris Georgiades said after briefing the European Parliament on Monday.
Speaking after a meeting with the EP Committee on Economic and Monetary Affairs, where he briefed members on the economic and financial situation in Cyprus, Georgiades said that with Cyprus having completed the programme, the country will no longer be included in the list of EU problems but will be in a position to contribute to joint Union goals.
He said that what he is presenting is “a story of economic recovery, of optimism and prospect.”
“We have come a long way, we have a second chance and we are determined to make the best of it”, Georgiades said. Referring to the EUR 10 bln bail-out, he said that Cyprus will be “able to complete the ESM/IMF programme on time, by this coming March.”
We have not utilised the full amount, he noted, pointing out that “more that 2 of the 9 billion [euros] of ESM funds will not be drawn.”
“We shall not be requesting a new programme and we shall not be needing a conditional credit line”, he assured MEPs, adding that “we can take it from here.”
At the same time Georgiades highlighted the fact that “the effort is far from over.”
Cyprus, he said, “has proven to be a resilient and competitive economy, an attractive destination for new business and new investment,” he noted, adding that “at the same time we know that we can do even better.”
He referred to the ongoing efforts for structural reform, noting that the government has already implemented ambitious welfare reforms, a tax administration reform and a public financial management reform.
“We now want to continue with an equally ambitious public administration reform”, he said, adding that “privatisation and concessions also remain high on our agenda.”
Conditional to the bailout funds was that Cyprus needed to raise some EUR 1.4 bln from privatisations or from denationalisation, to lower the burden on the taxpayer and make the economy more competitive.
So far, the government has concluded the work to issue a casino license, is in the final process of negotiating with bidders who will take over management of Limassol port, is about to ‘unbundle’ the state-controlled Electricity Authority (EAC) with a view o creating two separate entities, and plans to privatise the state-owned telco Cyta. All of these have seen a bumpy ride as the government delayed the privatisation process and is now facing vociferous opposition from political parties and trade unions, leading up to the May parliamentary elections.
Georgiades also said the administration would be tackling the problem of undue bureaucracy.
Referring to the banking sector he said that it has been completely revamped and is now “much smaller and healthier.”
He acknowledged the high levels of non performing loans, pointing out however that they are one of the leftovers of the crisis and what we need is time and effort to see them come down.
Replying to MEP questions, Georgiades stressed that Cyprus is definitely not a tax haven since it has a corporate tax rate of 12.5%.
Referring to the effort to reunite the island, divided since the Turkish invasion of 1974, under a federal roof, he said that with reunification all rules of EU governance, banks supervision should apply without exception.
Asked about the prospects of revenues from natural gas discovered in the Cyprus exclusive economic zones (EEZ) adjacent to Israeli and Egyptian waters, he noted that Cyprus chose not to take into consideration such eventual income so that it can achieve its goals without counting on future income. Any such revenues will have to be managed keeping in mind future generations, he noted.
The first offshore gasfield, Aphrodite, within the Block 12 concession operated by US-based Noble Energy, BG and Israel’s Delek and Avner, has estimated reserves of about 3 trillion cubit feet, a tenth of what was discovered by ENI in the Egyptian gasfield Zohr in late-2015, and is expected to come on stream by 2019-2010.
