articles | 19 February 2013

Draghi: Important to have an adjustment program with Cyprus after elections

President of the European Central Bank (ECB) Mario Draghi has said that it is important that an adjustment program with Cyprus be agreed, after the presidential elections on the island, the second round of which will take place this coming Sunday.

The ECB official added that a Memorandum of Understanding (MoU) with Cyprus, which submitted a request for a bailout from the European Stability Mechanism in June last year, should ensure the viability of Cyprus’ debt and should not lead to financial instability.

Replying to a question by an MEP at the European Parliament’s Economic and Monetary Affairs Committee, Draghi said “"we welcome the position of the Cypriot Government to draw up a Memorandum and we appreciate the efforts for the adoption of the first measures we agreed”.

He stressed that it is very important to agree on a bailout program after the presidential elections in Cyprus that will take place on the 24th of February.
“The Eurogroup statement says that there will be a program and that this program should be agreed”, he pointed out.

He said it is of great importance that there is a “real commitment” on behalf of the new government to be formed after the presidential elections on the island.
Draghi stressed that “we must also find ways to ensure the viability of this program”.

The ECB official further said that two elements must be ensured, firstly, viability and secondly fiscal stability, adding that “both elements should be on the negotiating table”.
According to Draghi, in terms of governance, the transparency, and the financial sector supervision should be strengthened, while, liquidity and debt, will be reviewed in 2013.

He added that the final adjustment program should also include close supervision frameworks to combat tax evasion and money laundering.
Concluding, he said that “there should not only be relevant legislations, we must ensure that they are implemented”.

Cyprus applied on June 25 2012 for financial assistance from the European Stability Mechanism. The programme is expected to be agreed on Eurogroup level in March.

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