Tuesday

23rd May 2017

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.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

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".

Portugal held up as symbol of EU recovery

Portugal to sail out of troubled waters after eight years of financial crisis, EU commission predicted, amid broad but "fragile" recovery in European economy.

Stakeholders' Highlights

  1. UNICEFChild Alert on Myanmar: Fruits of Rapid Development yet to Reach Remote Regions
  2. Nordic Council of MinistersBecome an Explorer - 'Traces of Nordic' Seeking Storytellers Around the World
  3. Malta EU 2017Closer Cooperation and Reinforced Solidarity to Ensure Security of Gas Supply
  4. European Healthy Lifestyle AllianceHigh-Intensity Interval Training Is Therapeutic Option for Type 2 Diabetes
  5. Dialogue Platform"The West Must Help Turkey Return to a Democratic Path" a Call by Fethullah Gulen
  6. ILGA-EuropeRainbow Europe 2017 Is Live - Which Countries Are Leading on LGBTI Equality?
  7. Centre Maurits CoppietersWhen You Invest in a Refugee Woman You Help the Whole Community
  8. Eurogroup for AnimalsECJ Ruling: Member States Given No Say on Wildlife Protection In Trade
  9. European Heart NetworkCall for Urgent Adoption of EU-Wide Nutrient Profiles for Nutrition & Health Claims
  10. Counter BalanceInvestment Plan for Europe More Climate Friendly but European Parliament Shows Little Ambition
  11. Mission of China to the EUPresident Xi: China's Belt and Road Initiative Benefits People Around the World
  12. Malta EU 2017EU Strengthens Control of the Acquisition and Possession of Firearms