Brussels, 22/01/2013 (Agence Europe) - On Tuesday 22 January 2013, Stefanos Stefanou, a Cypriot government spokesman, ruled out the need for privatisation in order to solve the country's financial problems because the debt burden may be manageable once the EU and IMF have disbursed financial aid. Cypriot Finance Minister Vassos Shiarly said privatisation would only be considered once the PIMCO audit of Cypriot bank capital requirements was known. The PIMCO assessment will be published when Cyprus has signed an agreement with the troika of lenders, explained the outgoing head of Eurogroup, Jean-Claude Juncker, on Monday evening, saying that an aid programme for the country would not be established until March. Confirming this timeline, ECB Executive Council member Jörg Asmussen said the EU must not underestimate Cyprus' financial woes, pointing out that “disorderly developments” could undermine progress made this year and turn the island into a severe stability risk for the eurozone despite its small size.
The Cypriot president, Demetris Christofias, expressed concern about the economic tsunami that forced the government to request aid from the eurozone. He said the government hoped to be granted a “fair” bailout programme, needed partly because of the two writedowns of Greek bonds, which have cost the island a quarter of its GDP. Speaking in Brussels, Shiarly said that many people in Europe believe private sector involvement (via a writedown) would be a mistake, and he agreed with them. German Finance Minister Wolfgang Schäuble called for a slashing back of the Cypriot banking sector, which he said was oversized compared with the country's GDP. The cash needed to bail out the banks is likely to be in the order of 60% of the island's GDP. (EL/transl.fl)