Cyprus President Demetris Christofias pledged the government will probe into the mistakes that lead to the excessive exposure of the Cypriot banks to the Greek sovereign debt, as Cypriot employers call for a new economic model in Cyprus.
Addressing the annual general assembly of the Employers and Industrialists Federation, Christofias outlined the government`s policy at the backdrop of the global financial crisis which affected severely the Cypriot economy, noting that the government aims at ``solving the problems created from the excessive exposure of the Cypriot banks to Greece to probe into mistakes and omissions which lead to this exposure, with the primary target to avoid such mistakes in the future.``
Stress tests conducted by the European Banking Authority have showed that the Cypriot banks, Bank of Cyprus and Laiki Bank should secure an additional capital of 3.57 billion euro following the haircut of the Greek sovereign debt. The government has decided to underwrite a capital issue of 1.8 billion euro by Laiki which was affected the most by the Greek debt haircut.
In speech delivered by Finance Minister Vassos Sharly, Christofias added that the government aims at a further fiscal consolidation of the public finances with a socially just way and in consultation with the social partners ``so to limit the divergences observed in the (fiscal) targets set.``
Cyprus needs to take additional consolidation measures as figures for the first quarter show a divergence of 0.9% GDP from the government target for a 2.5% budget deficit for 2012.
Furthermore, referring to the prospects for Cyprus following the discovery of natural gas deposits in its Exclusive Economic Zone, Christofias said the government aims to alter is energy mix with the incorporation of natural gas as a means of power generation as well to render Cyprus as an regional energy hub.
He noted however that the government does not neglect on traditional sectors of the economy such as tourism and industry.
OEB Chairman Philios Zahariades called for a new economic model aiming at growth on the basis of entrepreneurship, outwardness and competitiveness.
Outlining the grim prospects of the economy, such as the contraction of the economy, Cyprus` exclusion from international markets, which in combination with the capital enhancing efforts by Cypriot banks following the Greek debt haircut, lead to high interest rates, Zachariades called for a new growth model on the basis of entrepreneurship, outwardness and competitiveness.
``We believe to entrepreneurship as the main driver for the growth of the economy, employment and the creation of wealth, which would enable us to face the social problems,`` he said.
OEB Chairman noted ``we believe in outwardness because we are in world where borders are less significant than in the past, in a large European market, in a world with increasing free financial transactions,`` adding ``we believe in competitiveness because in a global economy only competitive countries will continue to develop.``.
``Cyprus and its citizens witness an unprecedented business drought a nightmarish unemployment a stressful financial pressure and an uncertain future,`` he said.
Zachariades concluded by saying that ``the citizens, businesspeople and workers alike, rest all their hopes to the politicians because it is they with their decisions who can invert the situation of the economy and to bring growth, business activity, employment and hope in the country.``
Addressing the assembly, Minister of Labour and Social Insurance Sotiroula Haralambous said the Ministry is focused on ensuring a dignified job in healthy and safe conditions for every citizen.
Referring to unemployment Haralambous said the Ministry despite the tight public finances sought to support employment with a series of schemes, providing incentives to businesses for maintaining the job positions and hiring unemployed persons.
``Approximately nine thousand persons found employment through these schemes and that was achieved with the response of the business world,`` Haralambous noted.
Noting that the financial crisis revealed and continues to reveal the weaknesses of the Cypriot labour market structure, Haralambous was critical of the practice by Cypriot companies to hire third-country nationals and unskilled workers from the EU member-states rather than Cypriot personnel.
``We need to make our introspection, to see the crisis as a challenge for rectifying the incongruities,`` she concluded.
On its part, Phidias Pilides, Chairman of the Cypriot Chamber of Commerce and Industry (CCCI), stressed that the state should address with great care the acute problems of the business world and the market and should assist the Cypriot businesses to weather the crisis.
``We are deeply concerned for the bad course of the economy but also for its estimated bleak prospects,`` he added.
He recalled the CCCI`s executive committee`s call on the government the parliament for measures based on four pillars and namely, fiscal consolidation, support to the businesses and growth, the improvement of liquidity and borrowing rates as well as reforms aiming at modernizing the country`s economic model.
In his address, President of the Turkish Cypriot Businessmen's Association, Metin Shadi, said that if a just and immediate solution for the sake of all the Cypriots can not be immediately achieved, then both sides should sign an official declaration to proclaim what they have agreed up to now, in order to infuse trust and confidence to Cypriots.
``Even if failing to do all that, we suggest that Maras –Varosha must be opened for rehabilitation of its owners, you may say as a part of goodwill or give and take basis, but certainly as a confidence building measure, which in result will generate an economic activity enhancing project that we need in these economically hard times``, he added. (CNA, SigmaLive)
Posts
