Cyprus President Nikos Anastasiadis appealed to EU partners and the IMF to revise a number of ill-considered decisions on the restructuring of the banking sector of the country and repeal measures to restrict the movement of capital that contribute to "the deepening recession in the economy, the further growth of unemployment and thereby hamper fiscal consolidation."
Deputy Spokesman of the Government of the Republic Victor Papadopoulos confirmed today that the Cypriot leader sent a letter to IMF Managing Director Christine Lagarde, the European Central Bank / ECB / Mario Draghi and European Commission President Jose Manuel Barroso, outlining emerging on the island difficult situation due to the implementation of decisions "troika" of international lenders. He did not disclose the content of the document, but the text of the letter fell into the hands of local journalists.
Anastassiadis criticized how the decisions on Cyprus were prepared, in particular, on the "haircut" of deposits, which were taken "without careful preparation." According to him, "there was no clear idea of how the compulsory attraction of depositors' funds should have been carried out," which is why "there are big legal problems and delays in completing this process." "Moreover, no distinction was made between long-term deposits yielding high interest and current account funds representing the working capital of firms," the letter said. "This led to a significant loss of working capital of the companies."
The President expressed disagreement with the decision of the Eurogroup on the sale of the Greek branches of the Bank of Cyprus and the Cyprus People's Bank (known as Laika / Bank of Piraeus and their release from the "haircuts", which deprived Cyprus of significant funds. He also spoke against the decision to "hang" the Bank of Cyprus "Laika" debt in 9 billion euros before the ECB. According to him, this is currently the main reason for the lack of liquidity faced by the Bank of Cyprus: "Instead of addressing the acute shortage of liquidity in the main system for the country by the Bank of Cyprus through the adoption of a long-term, sustainable and viable program, the" troika " the way of imposing a strict control over the movement of capital, "Anastasiadis said in a letter." Such artificial measures may be able to prevent a massive outflow of funds from banks in the short term. The imposition of restrictions over a long period will inevitably have a devastating impact on the economy of the country, will damage international business relations and will have a negative pressure on GDP. "
Anastasiadis said that the success of the program of financial assistance to Cyprus, as endorsed by the Eurogroup and the "troika", "depends on the revival of a strong and viable Bank of Cyprus." "That's why I urge you to support a long-term solution to the problem of having liquid funds in the Bank of Cyprus - the president said. - This decision will restore confidence in the banking system and allow the resumption of full-scale economic activity without the restrictive measures and capital controls. This will also help to attract Foreign direct investment in Cyprus. "
As possible solutions to the problems of liquidity Anastasiadis proposed to convert part of the debt, "Spitz" in front of the ECB's long-term bonds, as well as the decision to abandon the Eurogroup on the transfer of the debt in the amount of 9 billion Bank of Cyprus as part of the consolidation process.
Author: Alexey Berazhkou