Brussels, 11/01/2013 (Agence Europe) - At a summit of the European People's Party in Limassol, Cyprus, on Friday 11 January 2013, the German chancellor, Angela Merkel, said: “I will say to Cyprus that the task will be such that on one side it must follow reforms and on the other side there has to be solidarity from other European countries”. She was echoing comments by Euro Commissioner Olli Rehn in an interview with German newspaper Handelsblatt the same day in which he said: “Cyprus has enacted several laws against money laundering in recent weeks and months, the crucial thing is implementation, to ensure this is not a problem on the island”. Cyprus presented anti-money-laundering measures to European sherpas on 10 January.
Rehn said there had been progress in the talks with the Cypriot government and Merkel said that it was too soon to say that a decision could now be taken. Nicosia hopes to have a draft agreement initialled by the eurozone on 19 February.
Credit rating agency Moody's has downgraded Cyprus by a notch from B3 to Caa3, and indicating “negative prospects”. Moody's says the weight of public debt could well become unsustainable. The European Commission expects the country's debt to reach 90% of GDP in 2012, which together with the troika aid currently being negotiated would bring it close to 100% of GDP. In order to get the debt back on track, “a haircut (writedown: Ed.) is not an option for us”, warned Rehn. (EL/transl.fl)