So­lu­tion will boost eco­nomic de­vel­op­ment

Financial Mirror (Cyprus) - - FRONT PAGE -

Pres­i­dent Ni­cos Anas­tasi­ades said in Chicago that re­la­tions with the United States are of a strate­gic im­por­tance and “we have a vi­sion to trans­form Cyprus and to un­lock its full po­ten­tial, for the ben­e­fit of its peo­ple.”

Speak­ing at the Chicago Coun­cil on Global Af­fairs be­fore de­part­ing for New York to ad­dress the UN Gen­eral Assem­bly, he added that a so­lu­tion to the Cyprus prob­lem will act as a cat­a­lyst for the eco­nomic de­vel­op­ment for the decades to come and with huge po­ten­tial ben­e­fits for many sec­tors of the econ­omy in­clud­ing energy, ship­ping, tourism and trans­port.

The Pres­i­dent said when he took of­fice he and his eco­nomic team were well aware that the econ­omy was run­ning into trou­ble as the fi­nan­cial sec­tor had run an un­sus­tain­able credit boom for more than a decade, which fu­elled a prop­erty and con­sump­tion boom. He said the im­pact of the de­ci­sion to im­pose a hair­cut on Greek sov­er­eign debt left the Cyprus banks on the brink of col­lapse while there was a se­vere fis­cal cri­sis and the public cof­fers were lit­er­ally on the brink of ex­haus­tion. In ef­forts to avoid an eco­nomic col­lapse, “we agreed on a pro­gramme of eco­nomic re­form and fis­cal con­sol­i­da­tion”.

“To avoid the up­com­ing Ar­maged­don and con­sid­er­ing that the sec­ond largest sys­temic bank had al­ready reached the point of no re­turn, we had to ad­here to an un­prece­dented and still ques­tion­able Eurogroup de­ci­sion, which in­cluded a se­vere hair­cut of bank de­posits”, the Pres­i­dent re­marked.

Anas­tasi­ades said his gov­ern­ment had to make this pro­gramme work. “Just two and a half years later, I stand be­fore you and state with con­fi­dence that we ex­pect a smooth and suc­cess­ful com­ple­tion of the pro­gramme within the next few months”.

Most im­por­tantly, I can proudly present Cyprus as a suc­cess story of eco­nomic re­form, said Anas­tasi­ades, not­ing that “we are emerg­ing stronger from the cri­sis and we can be very op­ti­mistic for the fu­ture”.

Cyprus, he said, “has of­fi­cially ex­ited re­ces­sion, and is reg­is­ter­ing growth as of this year. A much stronger growth than any­one had ex­pected. We are on the road to­wards full re­cov­ery”, with a “re­struc­tured and fully re­cap­i­talised bank­ing sec­tor and with a strong pres­ence of ma­jor US in­vestors like Wil­bur Ross and Third Point”, the fis­cal im­bal­ances fully ad­dressed and Cyprus re­turn­ing to the in­ter­na­tional mar­kets much ear­lier than any other pro­gramme coun­try.

Changes in­clude a pen­sion re­form, a bold wel­fare re­form, a public ad­min­is­tra­tion re­form in­clud­ing a re­vi­sion of the wage-bill, labour mar­ket re­forms, and a tax ad­min­is­tra­tion re­form. Crit­i­cal growth will also come from an am­bi­tious pri­vati­sa­tions pro­gramme, a dig­i­tal strat­egy and a ju­di­cial re­form “to trans­form our bu­reau­cracy from a red-tape to a red Anas­tasi­ades added.

Re­gard­ing the Cyprus prob­lem, he said a set­tle­ment will re­unite the coun­try, its peo­ple, the econ­omy, and will es­tab­lish good re­la­tions with Tur­key and will com­prise all the pa­ram­e­ters con­ducive to eco­nomic de­vel­op­ment, busi­ness and in­vest­ment; re­gional sta­bil­ity, and open mar­kets.

“This is what we are cur­rently ne­go­ti­at­ing with our Turk­ish Cypriot com­pa­tri­ots”, he said, “to reach an agree­ment on evolv­ing the Cyprus Re­pub­lic to a care­fully de­signed Fed­eral struc­ture that will work for Cyprus”, while the EU is now be­com­ing a more ac­tive player.

“The so­lu­tion will act as a cat­a­lyst for the eco­nomic de­vel­op­ment for the decades to come. With huge po­ten­tial ben­e­fits for many sec­tors of the econ­omy; Energy, Ship­ping, tourism, or trans­port are just the most ob­vi­ous”.

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