We have to implement Troika plans, says Cyprus finmin

PRESIDENT of the European Council Herman Van Rompuy yesterday said the stakes were high for Cyprus due to its close links with Greece’s financial system, adding that the EU was ready to help however.

“The stakes are high – for you as neighbours with close links to (Greece’s) financial system, but also for all of us in the eurozone,” said Van Rompuy, in his address to the House of Representatives as part of his official visit to the island. “But unlike two years ago when the Greek crisis started, we now have the tools in place – the European Financial Stability Facility and, soon, the European Stability Mechanism – to guarantee the financial stability of the eurozone as a whole and help our member states in overcoming the crisis.”

But he underlined the need for Greece to remain in the euro area, while also respecting its commitments to the EU. Following their meeting at the Presidential Palace, President Demetris Christofias admitted he and Van Rompuy had discussed the possibility of Cyprus seeking a bailout if the government failed to help banks exposed to Greek bonds to recapitalise.

“Our efforts focus on avoiding entry into the European Stability Mechanism,” said Christofias. “However, I would like to thank the President sincerely for his assurances regarding Brussels’ readiness to help if needs be.”

Christofias added: “The Government is closely monitoring the situation and our co-operation with the competent institutional bodies of the un ion is, of course, incessant”.

In his parliamentary address later on, Van Rompuy referred to the recent discovery of energy resources in Cyprus as one of the island’s “many assets”, which would “no doubt help to overcome current economic challenges”.

One such challenge, he added, was bringing public debt and deficits under control, and the Fiscal Treaty Cyprus signed earlier this year – which Van Rompuy expects parliament to ratify soon – should help in the direction of raising revenues, reducing expenditures and promoting structural changes.

“A robust economy requires high tax compliance, a solid financial sector, a flexible labour market and a sustainable social protection system,” said the EU Council President. “The choices as tohow to achieve this are yours, but they have to be made.”

He said there were some serious structural challenges for all EU economies –“and Cyprus is no exception”.

He added: “Overcoming them will require tough decisions and decisive actions. To bring down public debts and deficits, restore competitiveness, finance our future.”

In contrast, President Christofias stated that austerity-only measures, “evidently lead our economies to deeper recession”.

He said the Greek people could not endure further austerity measures, calling on the EU to “immediately activate uncommitted resources from structural funds of the Un ion” to help the country boost employment and remain in the euro area.

Either way, Van Rompuy said Cyprus was “well equipped” to deal with the economic challenges.  “In the past your country has shown the resourcefulness and resilience needed to adapt your economy,” he said.

However he cautioned:  “We all know the risks are not over yet.”

Van Rompuy also referred to the Mari blast year – when 98 containers of explosives on the Evangelos Florakis naval base self-detonated killing 13 people and blowing up the island’s main power station in Vasilikos – as “another heavy blow to your economy”.

However, plans are on the way on an EU-level to help member states boost growth and employment, he said.

According to Van Rompuy, there was an informal summit last week to discuss common policies and mobilise funding projects to help open job positions and boost growth in the EU. A new meeting will be held in June, “to take further decisions”.

But he added: “It will take time before all reforms and investments deliver their full impact. In this field, there are no magic formulas. There is no quick fix”.

Van Rompuy also referred to Cyprus’ term as President of the EU Council, starting this July, which will see the launch of negotiations on the EU’s upcoming seven-year budget, which will be discussed among the leaders for the first time next month. “Our goal is to conclude them by the end of this year,” said Van Rompuy.

Describing the budget as “Europe’s tool for growth and jobs”, Van Rompuy said it would be used to support thousands of investments in different areas – such as research, development, transport and energy infrastructures – as well as people seeking jobs or upgrading their qualifications.

Regarding Turkey’s reactions to Cyprus’ EU presidency, Van Rompuy said he would like to “recall the strong support which the European Council provided to the upcoming Cypriot Presidency” back in December 2011, adding: “It must be respected by all.”

Source: Cyprus-Mail

By Jacqueline Agathocleous

Published on May 29, 2012

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