Cypriot President Demetris Christofias has promised he will not obey orders from international lenders to cut wages in return for a bailout as he prepared to push political leaders to rally behind him before he starts negotiations to get the money.
Christofias, a Communist, said he won’t reduce wages or a month’s bonus given workers as demanded by the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) that he’s asking to bail out Cyprus, as it did Greece, but only on the condition that austerity measures be imposed.
“I’m certainly ready to take to the streets with the workers,” he said. Greeks have been protesting, striking and rioting against pay cuts, tax hikes and slashed pensions for 2 1/2 years, to no avail.
Christofias, who is not running for re-election next year, was to meet with his poltical party chiefs for the second time in 10 days to discuss his government’s counter-proposal to the Troika. Christofias needs opposition support to push any budgetary measures through Parliament.
Cyprus in late June became the fifth Eurozone member since Greece in 2010 to request a financial rescue, after its banks were nearly bankrupt by their holding of Greek bonds when the Greek government earlier this year imposed 74 percent losses on investors. Cyprus in talks with the Troika to fix the size of the bailout, which will include banks as well as the public sector.
In its draft counter-proposal, which was discussed with union and business leaders, the government rejected the Troika’s call to sell some state assets as a condition for aid and seeks to shield its banks from new requirements, such as an 18-month limit after which creditors could sell collateral backing overdue loans.
“Without the consent of the political parties it will be very difficult to move ahead,” Christofias saidi. Since the budget requires the approval of Parliament, the government can’t advance without broad support. “And if we don’t move ahead, we’ll be shooting ourselves in the foot,” he said.The government has also sought a 5 billion euros ($6.5 billion) loan from Russia, though Russian Finance Minister Anton Siluanov said Oct. 12 that no agreement has been reached.
Cyprus is in talks to extend the maturity of a 2.5 billion euros loan granted by Russia last year, Cypriot lawmaker Stavros Evagorou said. Russia has given “positive signals” on prolonging the loan’s maturity by four years to 2020, he said.
(Sources: Bloomberg, Capital)
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