Riga/Brussels, 28/04/2015 (Agence Europe) - The Cypriot authorities are planning two long-term issuances this year in order to consolidate their access to the international markets, with a view to their exit from the bailout programme, which they hope can be pulled off without a safety net.
“Sufficient progress has been made on all fronts to re-establish the viability of our public finances, with a view to the conclusion of our programme”, the Cypriot finance minister, Harris Georgiades, told EUROPE in an interview on Friday 24 April, on the sidelines of the Ecofin meeting in Riga. “All of this has restored the credibility” of the island, Georgiades explained, adding that the reforms had been well received by the markets. “We returned to the markets last year and we hope to repeat the exercise, probably twice this year and, most importantly, this will establish access to viable markets in order to end the programme in a timely fashion and without difficulties”, the Cypriot minister explained. When asked whether this exit would be a clean break, in other words without the safety net of a precautionary credit line under the ESM, he said that he was “highly optimistic” about this possibility.
He listed the positive events which underpin this confidence: the positive outcome, at the national parliament, of the insolvency package issue, which paves the way for Cyprus to join the 'quantitative easing' programme of the ECB (buy-back of public debt), budgetary results which exceeded the targets set and the total lifting of the measures to restrict the movement of capital. Georgiades observed that since these measures were lifted, “deposit flows have been positive, so that's another manifestation of a return to confidence”. The long-awaited adoption of the framework for property foreclosures will furthermore allow the 'troika' (Commission, ECB and IMF) to resume its mission in Cyprus, where it will, amongst other things, evaluate the framework adopted in the light of the MPs' amendments. “I believe that we should adopt a 'global image' approach, which will improve the legal framework; this reform may have to be revised once it is applied in practice, and we are prepared to re-evaluate it, if necessary, to decide on any improvements”, he explained.
“Our fiscal situation is turning out better than expected, our bank recapitalisation needs are also lower than initially expected” and the banks are able to raise private capital, the minister added. This means that part of the envelope of the ESM's financial bailout programme will “probably remain unutilised”. “This is the reason why we would be interested in discussions with the institutions and the Eurogroup about utilising part of this buffer to refinance debt”, the minister explained, adding that this action would be debt-neutral. The aim would be, he explained, to use part of the buffer to pay back the “costlier” private debt, which would also give a boost to the economy. “I have put it on the table but I haven't had a substantial discussion yet”, the Minister explained. (Elodie Lamer)