Tuesday

26th May 2020

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 20 years of archives. 14-day free trial.

... or subscribe 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".

German court questions bond-buying and EU legal regime

The German Constitutional court ordered the European Central Bank to explain its 2015 bond-buying scheme that helped eurozone stay afloat - otherwise the German Bundesbank will not be allowed to take part.

News in Brief

  1. Johnson: Shops in UK will reopen on 15 June
  2. German doctors: Summer holidays could cause second wave
  3. EU forced to choose between China and US: Borrell
  4. Spain to lift two-week arrival quarantine from July
  5. Germany gives Lufthansa €9bn bailout for equity stake
  6. Volkswagen ordered to pay in landmark 'dieselgate' case
  7. 40 million health workers urge more G20 investment
  8. Jourova: Budget rule-of-law link 'more needed than ever'

Coronavirus

ECB promises (almost) whatever it takes

The eurozone's central bank has promised to buy up to €750bn of government and private bonds in new pandemic counter-measures.

Opinion

What does coronavirus 'Black Swan' mean for markets?

Falling demand and prices for oil and raw materials will revive the risk of deflation. The collapse in international trade and long-term rethinking of China's role as the major hub for the production of consumer goods and electronics is inevitable.

Stakeholders' Highlights

  1. European Sustainable Energy WeekThis year’s EU Sustainable Energy Week (EUSEW) will be held digitally!
  2. Nordic Council of MinistersNordic states are fighting to protect gender equality during corona crisis
  3. UNESDACircularity works, let’s all give it a chance
  4. Nordic Council of MinistersNordic ministers call for post-corona synergies between economic recovery and green transition
  5. Nordic Council of MinistersNordic co-operation on COVID-19
  6. Nordic Council of MinistersNordic research collaboration on pandemics

Latest News

  1. How Kaczyński ruined Poland, judges tell MEPs
  2. EU data protection rules abused to censor media
  3. Draft EU 'green recovery' plan amid clash over natural gas
  4. Clock is ticking: 300,000 vs 3.3m Covid-19 Africa deaths?
  5. Recovery plans unveiled This WEEK
  6. EU and UK stumbling into Irish border crisis
  7. Malta patrol boat 'intimidates' capsized migrants
  8. How coronavirus might hit EU defence spending

Join EUobserver

Support quality EU news

Join us