articles | 07 April 2014

Cyprus debt is sustainable says Finance Minister

Minister of Finance Harris Georgiades clarified that there is no possibility of a haircut of the Cypriot debt, expressing absolute confidence that Cyprus' debt is sustainable.

Addressing a conference of the European Public Law Organization, in Nicosia, on 'The crisis of the euro and of the banking sector at the European periphery', which will discuss the possibility and legality of the haircut of the Cypriot debt, the Minister stressed that: “Even though this is an interesting question to raise academically, let me clarify that there is no such plan, no intention and no need. I am absolutely confident that the Cypriot debt is sustainable. And what is more important, the markets also think likewise." 

The Minister said that he was willing to accept the reference to a European periphery only in geographical terms. “The Cypriot government and I’m sure the Cypriot people will do whatever is necessary to ensure that we remain at the very core of the European Union”, he added. 

The conference was also addressed by Former Prime Minister of Italy and current member of Constitutional Court of the country, Giuliano Amato, who urged political leaders to give Europe more fiscal capacity to cope with asymmetric shocks that might create crisis in the area.

“Without some sort of risk sharing, we could not recreate an integrated banking market and therefore a banking union, not only with a single supervision but also with a single resolution fund and a fund for guarantee of the deposits”, he noted. Amato pointed out that “if we build a banking union and we give fiscal capacity to the Union itself, at that point a more integrated Union politically will be necessary and inevitable”. 

He added: “You can’t increase the powers of decisions of the supranational level of governance without also making that level more accountable in democratic terms. We need more integration to have more solidarity but we need more solidarity to have more integration”, he noted. 

At the same time he urged the political leaders to add what is missing and to find the courage to create also emotionally the sense of “what we can achieve by staying together”. 

Acknowledging that the EU is in a bottleneck, Amato said that the only solution to the problems is staying together to find a way to eliminate the disasters the Union has already made. He also said that the most dangerous divide Europe is now experiencing is the divide between south and north. 

Addressing the conference, Cyprus' Attorney General Kosta Clerides said that the effects of the crisis experienced all over Europe were more felt in the south of the Eurozone and the consequences were particularly hard in Cyprus. The conference, he added, aims at analysing what happened and what measures should be taken in order to make the euro stronger and avoid similar situations in the future.

Source: Financial Mirror

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