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Cyprus News Agency: News in English, 11-11-29

Cyprus News Agency: News in English Directory - Previous Article - Next Article

From: The Cyprus News Agency at <>


  • [01] IMF: Cyprus economy faces strong headwinds
  • [02] Fule responds to Ankara as regards Cyprus EU Presidency
  • [03] Foreign Ministry rebuffs Bagis suggestions
  • [04] Omirou : Pressure must be exercised on Turkey to change its stance

  • [01] IMF: Cyprus economy faces strong headwinds

    The Cypriot economy faces strong headwinds and downside risks due to financial turbulence in the euro area, the large exposure of Cypriot banks to Greece, and the need for substantial fiscal consolidation to stabilize public finances, the International Monetary Fund (IMF) has noted.

    The IMF Executive Board, which concluded the consultation with Cyprus on November 18, urges the authorities to act forcefully to restore sound public finances and safeguard the stability of the banking system. Steadfast implementation of fiscal and structural reforms on several fronts would also be critical for a return to durable growth over the medium term, IMF points out, adding that it supports the authorities plans to achieve fiscal balance over the next three years as an appropriate strategy for undertaking the necessary fiscal correction without unduly damaging growth prospects.

    In addition, IMF Directors express concern about the vulnerabilities arising from Cypruss large banking sector.

    In the conclusions, the Directors agree that an ambitious and credible fiscal adjustment is essential to regain access to the international capital markets and put the public debt ratio on a downward path.

    They also consider that front-loading the adjustment with measures to reverse recent increases in public sector wages and poorly targeted transfers would provide a credible signal of the authorities commitment to medium-term consolidation and bolster investor confidence.

    Reforms of the cost-of-living allowance system would also be important for achieving the fiscal targets and improving real wage flexibility and competitiveness, IMF notes.

    Directors also underscore the importance of other fiscal reforms to underpin the consolidation efforts. Priorities should include the introduction of a medium-term budget framework and the adoption of fiscal rules consistent with EU directives.

    Additionally, IMF Directors highlight the need for reforming the national pension and healthcare systems, which threaten to put unsustainable pressures on the budget as the population ages.

    In the conclusions, IMF Directors express concern about the vulnerabilities arising from Cypruss large banking sector and the possibility of adverse feedback loops with the public finances and the real economy in the context of weakening balance sheets.

    They also stress the importance of building prudent capital buffers and of ensuring adequate liquidity in the financial system. These actions should be supported by contingency planning and the immediate passage of legislation to provide the authorities with full powers to recapitalize or resolve banks, if necessary, IMF adds.

    Finally, the IMF points out that the Cooperative credit institutions should also be watched closely and brought under the same regulatory and supervisory frameworks as banks.

    During the last visit of IMF delegation in Cyprus on October 12, 2011, the IMF concluded that Cyprus economy is expected to show little if any growth this year, and to register a small contraction in 2012. In addition, it predicted that the deficit in 2011 will be around 7% and in 2012 around 4%.

    [02] Fule responds to Ankara as regards Cyprus EU Presidency

    Cyprus is a sovereign state and a full member of the European Union and the European Commission totally respects the decision taken about Cyprus assuming the EU Presidency the second half of 2012, European Commissioner for Enlargement Stefan Fule has said Tuesday.

    Addressing the 67th Meeting of the EU-Turkey Joint Parliamentary Committee in Brussels, Fule said that both the EU and the UN recognize only the Republic of Cyprus, noting that Turkey must re -establish relations with all member states. He also underlined that this is set as a prerequisite for its accession to the EU.

    Commissioner Fule also referred to the regulation on direct trade of the EU, saying that it has yet to be implemented.

    The regulation on direct trade of the EU with those areas of the Republic of Cyprus in which the Government of Cyprus does not exercise effective control, was approved by the European Commission in April 2004 but has yet to be implemented because of strong objections from the Republic of Cyprus and other member states.

    [03] Foreign Ministry rebuffs Bagis suggestions

    The Cypriot Ministry of Foreign Affairs, in a written statement, points out that the attempt by the Turkish Minister for EU Affairs Egemen Bagis to link the issue of direct flights to and from the occupied areas of the Republic to the opening of ports, airports and national airspace of Turkey to Cypriot vessels, is void and unacceptable.

    Bagis has referred to a Taiwan model in Cyprus, by allowing direct flights to and from the illegal airport in occupied Tymbou.

    ``The real intention of Turkey is not the successful conclusion of the ongoing negotiation process to find a solution to the Cyprus problem, but to upgrade the status of the secessionist entity in the occupied areas and to undermine the Republic of Cyprus,`` says the Ministry.

    The Ministry notes that the opening of ports, airports and national airspace of Turkey to Cypriot vessels is a contractual obligation of Turkey to the EU, in the context of full and non-discriminatory implementation of the Additional Protocol of Ankara. The Ministry further recalls that since 2006, the EU calls regularly on Turkey to do so.

    [04] Omirou : Pressure must be exercised on Turkey to change its stance

    President of the House of Representatives Yiannakis Omirou referred to the need, the international community to exercise pressure on Turkey to change its intransigent stance.

    According to an official press release, in a meeting he had Tuesday with the President of the American Hellenic Institute (AHI) Nick Larigakis, Omirou said that the contribution of the overseas in USA is valuable towards this direction.

    Larigakis is currently in Cyprus in the framework of a tour to the triangle Cyprus, Greece and Israel.

    Apart from the Cyprus issue, Omirou and Larigakis discussed the latest threats and provocative actions of Turkey to the sovereign rights of the Cyprus Republic in its Exclusive Economic Zone (EEC).

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