Cyprus Financial Minister Says Country Will Pass Bailout Test
Cyprus Finance Minister Haris Georgiades on Tuesday expressed confidence that Nicosia will pass a first review of its bailout targets from the troika of international lenders.
A 30-strong delegation from the European Commission, European Central Bank, and the IMF is on the island to assess whether the recession-hit country is meeting its troika-set targets as agreed in a memorandum of understanding with international lenders in March.
"The government has been working intensely and I'm optimistic we will achieve a good result from the evaluation," Georgiades told reporters.
The first high-level troika meeting will be held on Wednesday morning.
Troika officials will be on the island number crunching until the end of the month to chart progress, or lack of it, made by the indebted eurozone country.
The island's next installment of bailout cash is dependent on that report which will go before the eurogroup of finance ministers.
In return for a 10 billion-euro bailout ($13 billion), international creditors demanded the winding up of the island's second largest banker Laiki and a haircut on deposits over 100,000 euros in its largest lender Bank of Cyprus.
The unprecedented eurozone "haircut" on deposits forced the government to close all the island's banks for nearly two weeks in March and impose draconian controls when they reopened.
Cyprus says it is fully committed to honoring the bailout terms despite their harshness on bank depositors and enforced regime of capital controls in the only eurozone member to have them.
Georgiades called the troika assessment "significant" and something the island must get used to as it will be repeated every three months.
"Nobody can feel happy about their country being forced to undergo external checks but the course of events that led us to this very difficult situation is well known," said the minister.
"Exiting the bailout quicker can only be done by implementing the measures that have been agreed," he added.
Georgiades said part of the problem is that Cyprus "spent beyond its means" for several years and now it had to cut its cloth accordingly.
"We were spending one billion more than we received in revenue, this will be corrected," said Georgiades.
He said that the raft of tax increases introduced under the bailout memorandum was producing the expected results because the economy was in recession.
"Taxes shouldn't go up during a recession, we need to cut state expenditure, the government can't continue to spend as if nothing has happened."
Georgiades said he was now looking to trim the 2014 budget by around 11 percent compared to this year.
Under the bailout agreement the government must establish a balanced budget and generate a primary surplus by the end of 2016 when the adjustment program expires.
| Copyright © 2012 Naharnet.com. All Rights Reserved. | https://naharnet.com/stories/en/90795 |