Cyprus EU bailout exit


10 March AtoZForex, Lagos – After a long standing journey of euro zone bailout, Cyprus now seeks to better its ratings, to enable it access to cheaper funding as it plans a Cyprus EU bailout exit. Cyprus finance minister, Harris Georgiades, has clarified that the country is being very cautious, and will try to avoid any new major borrowing, as the country plans to make a “clean exit” from the EU bailout program, scheduled to end in March.

A reasonable level of stability has now been reached, considering that finance minister Harris Georgiades clarified that the country will have no need for a precautionary credit line from institutional lenders and there was also be no need to add further support for Cypriot banks.

Meanwhile the finance minister expects to be able to keep on to policies, which have led to an end to public deficit. Such policies will help spur further upgrades by credit rating agencies, which will then inspire a reduction in state borrowing costs for the country, which currently stands at just over 4 percent. “We need investment-grade (ratings),” he said.

Soon to be “out and about” in markets

The finance minister remains timid upon the return of Cyprus to the international credit markets. As Harris Georgiades told on Thursday to the CNBC that:

“I cannot confirm if it’s going to be a 10 (year bond) or a 7 (year bond), but what the markets are seeing is a very positive trajectory in Cyprus, we are back in growth, the debt is coming down, the non-performing loans are being restructured fast, so the positive trajectory is clear to markets. Yet, I cannot confirm when but we will be out and about in the markets.”

See also: Cyprus Bribery – Guilty Lawyers

Cyprus reunification

Besides the Cyprus EU bailout, a major factor to be dealt with remains how negotiations will go regarding “whether and how the Turkish-backed breakaway region in the north of the island is reunited with the Greek-speaking south.” This is one of the world’s oldest conflicts, and optimism is growing about a potential resolution to come soon.

Speaking of the potential cost of a Cyprus reunification, Georgiades has however clarified that he has not factored in the possibility of a potential resolution, which will require capital funding plans for infrastructural investment. Considering that although a deal may be possible, “We are not there yet,” he said. Also, immediate capital investment in infrastructural projects may not be necessary.

Benefits of the reunification

In light of a reunification, Cyprus could however look to multilateral lenders such as the European Investment Bank, World Bank, the European Bank for Reconstruction and Development or the EU’s new “Juncker Fund” investment vehicle.

“We are not factoring anything in of these potentially positive developments,” he said. “We wanted to fix the economy … We don’t want to make any assumptions.”

The finance minister also made sure to point out that a reunification would be “immensely positive” for the Cypriot economy and the region at large. However, he was not budgeting for future gains just yet, same way as Cyprus was not yet assuming likely gains from new undersea gas flows.

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