Friday

19th Apr 2019

Cyprus bank warns against 'bad' EU bailout

  • Residents in Nicosia have been asked not to use air conditioning as temperatures hit 38 degrees Celsius in the shade on Monday (Photo: Orestis Kyriakides)

The Bank of Cyprus on Monday (1 August) warned that any further delay in appointing a government may lead to an EU bailout "with everything bad that entails."

"With our inaction we are risking the ability of refinancing the state and the consequences will be instant and serious," a statement from the largest Cypriot commercial bank said after President Demetris Christofias failed to put together a new cabinet over the weekend.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

Christofias ordered the resignation of the government last Thursday.

The move came three weeks after a blast at a naval base which killed 13 people and wiped out the island's main power plant. Estimates say the blast will cost the country a 17 percent drop in GDP this year.

Meanwhile, residents in the capital, Nicosia, have been advised not to use air conditioning devices despite scorching heat. Daily power cuts have also become commonplace since the 11 July explosion.

Both Standard & Poor's and Moody's ratings agencies last week downgraded Cyprus' bonds due to the political and economic crisis.

Angry protesters have been asking for Christofias to leave, blaming leaders for having left 2,000 tons of munition festering in the summer heat despite warnings by military experts.

"There is an immediate threat of the country entering the European Union's support mechanism with everything bad that entails," the Bank of Cyprus noted. "Time has run out. We are at that turning point at which history will judge us. It's time for immediate and effective action."

For its part, the EU commission on Monday denied that it is discussing financial assistance for the small island nation.

"The issue of financial assistance package is not on the table," it said in a statement.

"We are confident the Cypriot authorities will fulfil their commitments. And fully expect them to do what is necessary ... The Cypriot authorities can rely on the full support of the Commission in its effort to consolidate its finances and re-launch the economy."

It added that Nicosia needs to lower its budget deficit to 4 percent of GDP in 2011 and to 2.5 percent in 2012.

The Cypriot finance ministry also rejected speculation that the country will need a bailout, saying it has no significant funding needs until mid-December.

If Cyprus applies for help it would be the fourth country in the 17-member eurozone to do so after Greece, Ireland and Portugal.

Cyprus to get 'no strings attached' Russian bail-out

Eurozone member Cyprus is set to join Greece, Ireland and Portugal by seeking external aid to prop-up its finances. But unlike the EU and IMF bailout packages, its loan is to come from Russia with "no strings attached".

Feature

Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

Trump and Kurz: not best friends, after all

The visit of Austrian chancellor Sebastian Kurz to the White House on Wednesday showed that the current rift in transatlantic relations is deepening by the day.

Stakeholders' Highlights

  1. Counter BalanceSign the petition to help reform the EU’s Bank
  2. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  3. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  4. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  5. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  6. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  7. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  8. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  9. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  10. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  11. Nordic Council of MinistersNordic commitment to driving global gender equality
  12. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan

Latest News

  1. Romania drafts EU code on NGO migrant rescues
  2. Bulgaria, Hungary, and Malta shamed on press unfreedom
  3. EU drafts $20bn US sanctions list in aviation dispute
  4. Brunei defends stoning to death of gay men in EU letter
  5. US Democrats side with Ireland on Brexit
  6. Wifi or 5G to connect EU cars? MEPs weigh in
  7. How Brexit may harm the new EU parliament
  8. EU parliament backs whistleblower law

Join EUobserver

Support quality EU news

Join us