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16.01.2018

President of Cyprus: "We turned the crisis into new opportunities"

Before the presidential election, there are less than two weeks left - 28 January 2018 Cyprus will elect its president for the next five years.

On the eve of the elections, President of Cyprus Nikos Anastasiadis, who is also running for a new presidential term, gave an interview to the "Herald of Cyprus". He summed up the results of his government's work over the past five years and presented a pre-election program, which is a logical continuation of the reforms initiated under it.

- Let's briefly recall the situation that emerged at the time of your coming to power in 2013.

- At that time, the situation in Cyprus determined a number of negative factors. The country has lost access to international capital markets since the middle of 2011. In the first quarter of 2013, GDP contracted by 5,7%, by the end of the second quarter the situation worsened: the reduction was 6,5%. The volume of funds received from the European Central Bank (ECB) within the framework of the emergency liquidity provision (ELA) program, by the beginning of 2013 reached 11,4 billion euros, and the unemployment rate was 16%. The volume of liquidity (cash in the budget) by that time was the amount that would be enough for 30 days.

- In these conditions, you held very tough negotiations on the provision of emergency financial assistance by international lenders ...

- As you know, according to the results of the first meeting of the Eurogroup 16 March 2013, a "horizontal" tax was imposed on all deposits in banks in Cyprus. The losses in this case would be comparable to the interest accrued in two years. However, the introduction of this tax was rejected by the Cypriot parliament. In the second sentence, Laiki Bank was closed and a "haircut" of deposits was made to the Bank of Cyprus. Cyprus was in a deep recession, many predicted the country's exit from the eurozone.

Speaking about the "haircut" of deposits, I would not like to slide into populism. I will only say that recently we decided to compensate 75% of losses of pension funds - it's more than half a billion euros. Also, the National Solidarity Fund has been created, which we intend to fill with the deductions from the revenues derived from the export of oil and gas, and whose funds will be used to pay compensation to depositors who have lost money.

- What other key actions of your government would you note?

- The government managed to overcome the crisis in record time and turn the situation in its favor. The main objectives at that time were restoring creditor confidence in the government and the banking system of Cyprus, attracting investors from abroad, reforming and modernizing the public administration system, the banking sector, and introducing innovations.

One of the first steps taken by the government was the introduction of unpopular, but extremely important austerity measures. The budget was revised, the expenditure part was reduced to the maximum. At the same time, for five years before the crisis of 2013, the budget deficit increased by one billion euros per year - more than 5% of Cyprus GDP.

A turning point in the economy was already outlined by the end of 2013, and in 2014 for the first time in many years the budget showed a primary surplus. The way out of the stabilization program envisaged by the Memorandum with the "troika" occurred earlier than planned. Cyprus returned to international capital markets.

- However, the high level of non-performing loans (NPL) in the banking system remains a serious problem. What measures are being taken in this direction?

- Currently, about 47% of the total loan mass is accounted for non-serviced debt, but work is underway to reduce this figure. The volumes of overdue loans began to decrease after the parliament passed a law on the alienation of property of insolvent borrowers, as well as due to general improvement in the economic situation and a decrease in the level of unemployment. Banks are working to restructure loans: borrowers were able to reduce the size of monthly contributions and increase the repayment period of the loan. All these measures in the coming years will reduce the volume of NPL.

- To date, can we talk about the full restoration of the economy of Cyprus?

- After the rating of Cyprus has been downgraded by international rating agencies 22 times in a row, in the last two years it has been steadily increasing, and now Cyprus is just one step away from the investment level.

GDP for five years showed a significant increase by almost 10%: from -6,5% in 2013 to + 3,6% in 2017. The outflow of deposits from Cypriot banks, which began in the middle of 2011, ceased, and in recent years, on the contrary, their steady growth has been observed.

It was possible to completely pay off the debt to the European Central Bank, which provided 1,4 billion euros for the recapitalization of the Cooperative Bank, as well as the ELA debt of 11,4 billion euros. Residents and companies in Cyprus once again became available loans in banks, and interest rates fell to a record low.

The strategy pursued by the government made it possible to attract the world's largest energy concerns, which are currently searching for hydrocarbons on the shelf of Cyprus. An important step was the privatization of the port of Limassol, where innovation and modernization of processes made it possible to increase efficiency and reduce operating costs.

Among other important achievements are a number of reforms in the field of navigation, decisive measures in the fight against corruption in state bodies (for the first time since 1960!), The reform of the legal and judicial systems. In addition, it was decided to reduce the duration of the army service from 24 to 14 months.

The government also developed an attractive investment program for foreign investors, which contributed to the "restart" of the real estate market. To date, the inflow of investment from abroad has exceeded 7,5 billion euros.

- Against the background of such impressive economic successes, what measures have been taken in the field of social policy and support of the population?

- First of all, we managed to significantly reduce the unemployment rate - from 16% in 2013 to 10,7% by the end of 2017. Several new categories of social benefits have been established, covering a wide range of poor people who have not received any assistance before. For example, "chronic" unemployed and low-income pensioners receive a monthly allowance in the amount of the subsistence minimum. Also, a benefit for mothers with many children was again paid, which was abolished in 2012, and for the first time in Cyprus a benefit was introduced for fathers on parental leave. In general, the state's assistance now covers 35 thousand families - this is 11 300 families more than five years ago. In addition, the reform of the national health system was carried out. The first aid center for people with autism has been created.

- What are the most important achievements of Cyprus for the last five years?

- In general, I can say that we have turned the crisis into new opportunities. We have regained confidence in our government and the banking system, have increased the investment rating of Cyprus and restored the confidence of investors. Important steps have been taken towards reform and modernization, including in the area of ​​fighting corruption. A new vector of economic development was defined: multimillion-dollar investments went to research and innovation. We are building a state that cares about its citizens - especially those who are in need.

These and other achievements allow international observers to talk about the "Cyprus miracle", and we - feel pride in their achievements and continue to work.

With regard to the settlement of the Cyprus problem, we are ready to continue working on finding a solution that will put an end to the old conflict and ensure the peaceful coexistence of the two peoples and the prosperity of the united island.

I always said that in my vision, Cyprus is a single happy prosperous country, and through hard work we managed to take important steps in this direction.

Some items of the pre-election program of Nikos Anastasiadis

Over the next five years, the government intends to allocate 1 billion euros to support entrepreneurship. A corresponding agreement has already been reached with the European Investment Bank and the European Bank for Reconstruction and Development.

There are tax breaks for small and medium-sized businesses.

New programs are being developed to support youth entrepreneurship, women entrepreneurs, and others.

The priority is the creation of a new model of economic development, as well as the strengthening of the main sectors of the economy of Cyprus: tourism, shipping, the sphere of professional services,

The support of the poor and the payment of benefits to low-income families, pensioners, students, people with disabilities, families with many children, and others will continue.
We will continue to fight irreconcilably with corruption in state structures, and in the near future an anti-corruption agency will be established.

A source: VC

Tags: Cyprus, Anastasiadis, Interview, Economy, Politics, Elections, Crisis