Eco­nomic po­ten­tial of set­tle­ment ‘huge’, but no aid

Financial Mirror (Cyprus) - - FRONT PAGE -

The Euro­pean Sta­bil­ity Mech­a­nism (ESM) man­date does not al­low fi­nanc­ing a Cyprus set­tle­ment, its Man­ag­ing Di­rec­tor said on Tues­day af­ter a meet­ing he had with Cyprus Pres­i­dent Ni­cos Anas­tasi­ades, not­ing that “at the mo­ment that would not be pos­si­ble with­out chang­ing the ESM Treaty.”

In state­ments to the press Klaus Regling also said that it is im­pos­si­ble to quan­tify at the mo­ment the cost of a set­tle­ment, stress­ing that he is con­vinced that in the lon­grun the eco­nomic po­ten­tial of uni­fi­ca­tion is huge, the Cyprus News Agency re­ported.

On his part, Fi­nance Min­is­ter Har­ris Ge­or­gian­des, who also at­tended the meet­ing, said that the eco­nomic di­men­sions of the re­uni­fi­ca­tion of Cyprus are ex­tremely im­por­tant, adding that “we had a very use­ful dis­cus­sion as re­gards th­ese as­pects, in view of a rel­e­vant dis­cus­sion on the fi­nan­cial pa­ram­e­ters of the Cyprus prob­lem that will take place on Mon­day at the Eurogroup.”

He also said that they re­viewed the gen­eral progress of the Cypriot econ­omy and both the Pres­i­dent and him­self had the chance to re­it­er­ate the govern­ment’s com­mit­ment to con­tinue ef­forts to pro­mote re­forms, and the pru­dent man­age­ment of pub­lic fi­nances even af­ter the con­clu­sion of Cyprus’ Pro­gramme. Regling re­called that he was in Cyprus about a year ago, adding that it was a good mo­ment now to re­view the progress of the Cypriot econ­omy dur­ing the last twelve months, about half a year af­ter the end of the ESM Pro­gramme for Cyprus.

“And I think it is fair to say that Cyprus is reap­ing the ben­e­fits of the three-year ad­just­ment pro­gramme that was linked to the ESM and IMF Pro­gramme. Good progress in many-many ar­eas. Growth has come back. Un­em­ploy­ment is com­ing down and I am con­fi­dent that will con­tinue,” he noted. He said that there is com­mit­ment from the Pres­i­dent and the Min­is­ter of Fi­nance to con­tinue with a re­spon­si­ble fis­cal pol­icy.

He noted at the same time that there is un­fin­ished busi­ness in the area of pub­lic ad­min­is­tra­tion re­form, lo­cal govern­ment, the health sec­tor adding im­por­tant for the re­forms to con­tinue.

He said that the work done so far has been recog­nised by rat­ing agen­cies and ex­pressed cer­tainty that if re­forms con­tinue there will be more up­grades com­ing. “That is very en­cour­ag­ing,” he went on, adding that the banks that have gone through tremen­dous ad­just­ments in the last few years have chal­lenges. “They need to re­duce their NPLs. The leg­is­la­tion is in place to do that. So I think the pre­con­di­tions are there,” he added.

Asked what will be the im­pact on the Cypriot econ­omy if a so­lu­tion is found and it loans will be re­quired to fi­nance a so­lu­tion, Regling said that this is one of the big is­sues, “how much money will be needed, loans.”

“But it is very hard to say be­fore more de­tails are known about the set­tle­ment, par­tic­u­larly on the prop­erty is­sue. So I think there­fore it is im­pos­si­ble to quan­tify at the mo­ment the cost. There will be cost. I am con­vinced that in the lon­grun the eco­nomic po­ten­tial of uni­fi­ca­tion is huge.”

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