Brussels, 10/03/2014 (Agence Europe) - A year after receipt of international aid from the eurozone and the International Monetary Fund (IMF), Cyprus has beaten all expectations. Although severe, the recession is not as bad as forecast, and the state budget has easily met its targets for 2013. This was the joint assessment given by Cypriot finance minister Harris Georgiades and a European Commission representative at the troika of lenders, Maarten Verwey, at an event organised by the Bruegel think tank on Monday 10 March.
Verwey pointed out progress in recapitalising banks. Georgiades explained that cooperatives had recently been recapitalised and he was “cautiously optimistic about the stress tests” to be carried out on Cypriot banks in the autumn.
Georgiades refused to discuss the question of emergency liquidity from the ECB to the country's second-biggest bank, Laiki, which has been wound up and whose assets have been taken over by Bank of Cyprus. Some €9 billion were transferred, much without the assets that served as their guarantee. “Some issues require a revaluation, and I hope in time - so long as we time and time again show that we're sticking to the plan - a revaluation could possibly happen”, was all that Georgiades would say, without referring specifically to the question of emergency cash.
Cyprus was the first country in the eurozone in which a bail-in was applied, whereby bank shareholders, bondholders and many savers had to contribute to the bailout. Negotiations on the bail-in were due to resume that evening, and Verwey commented that “one of the key lessons to learn from the Cypriot bail-in is the decision-making process, for resolution requires that you can prepare things in some confidentiality and make rapid decisions”.
Governor of Cypriot central bank resigns. Reuters reports that the governor of the Cypriot central bank, Panicos Demetriades, stepped down on Monday 10 March. EUROPE will return to this. (EL)