AS PRESIDENT Demetris Christofias last night promised public servants that the government would “try to at least” defend their most “basic conquests”, reports surfaced outlining a list of austerity measures being sought by the troika.
Labelled ‘exclusive’, web-based InBusinessNews carried a lengthy list of measures including, a 15 per cent cut in the state payroll by 2013, scrapping of wage indexation (CoLA), and 13th salaries in the public sector, cutting 13th pensions of between €1,000 and €1,500 by 50 per cent, and those over €1,500 by 75 per cent, taxing allowances in the public sector, extending a wage freeze until the end of 2015, and introducing pension contributions for all public servants.
It also includes a rise in taxes of tobacco, cigarettes, alcohol and fuel.
The troika, a collective of the IMF, the ECB and the European Commission, presented their draft proposals at the end of their second mission in July. A new round of consultations is expected to take place later this month in September or October.
If the list of measures is validated, it will be bad news for the government, which has been avoiding having to touch the public sector, especially with an election looming next February.
There was more bad news for the government yesterday when Moscow said the €5 billion loan being sought by Cyprus would not materialise any time soon. This will leave the island no option but to turn to the troika.
Despite this, Christofias last night continued his tirade against the “greed and bankers’ mistakes” as he voiced anew his opposition to austerity without stimulus.
He told a gathering of public servants at the opening of the new town planning central offices that Cyprus was trying to draft its own strategic plan for the economy that will be presented to the international lenders.
He did acknowledge that Cypriots would have to make sacrifices for the country to tackle its economic woes.
“But I have to tell you that we must try to at least defend your most basic conquests,” he said, most likely referring to CoLA and the 13th salary.
“Of course, we will not manage without sacrifices, but it depends on the kind of sacrifices and the length of time that would be required,” he added.
Cyprus applied for financial assistance from its EU partners and the International Monetary Fund – the troika — in June.
Any bailout from the troika would most certainly be accompanied with painful austerity measures, and likely to begin with the public sector.
Christofias has been accused of stalling in getting back to the troika as the government has been waiting for the Russian loan, which is now far from certain.
According to Dow Jones news agency, which quoted Russian media reports, Russian Finance Minister Anton Siluanov said: “The issue is being worked on by the Cypriot side. But at the moment we haven’t come to an understanding that we have to resolve it (the issue) in the near future.”
Christofias, who will be meeting with IMF Managing Director Christine Lagarde today said Cyprus did not want austerity measures that have led other countries to bankruptcy: “this is our effort, this is our position, but we are trying with successive meetings that are not publicised to draft our own strategic plan – discuss it with the leaders of the political parties and the social partners and then put it to the troika.”
The president said he will hold a meeting with party leaders “when I am ready.”
He said any decisions must not be one-sided, burdening only the workers and the common folk who have no responsibility for the bad state of the economy.
“Greed and the bankers’ mistakes in combination with the irresponsibility of the regulating authority led the country to the difficult position we are in today,” he said. Referring to the aftermath of the 1974 Turkish invasion, Christofias said “we can, without making the same sacrifices – certainly they will be less – once again exit this crisis for which, I insist, neither the civil servants nor private sector workers are responsible.”
Published on 13 September, 2012