Cyprus lobbies for handout, assuring EU the island is an open book
(01-22 20:01)
Cyprus has nothing to hide from closer EU scrutiny of its financial sector, an official said, with Germany reportedly baulking at a bailout deal for the euro zone member due to money laundering claims.
“Cypriot authorities, with transparency, will continue to focus on this issue and we have no objection in cooperating with organizations or committees that deal with this issue,’’ government spokesman Stefanos Stefanou told state radio, AFP reports.
“We have nothing to hide regarding the allegations [money laundering] against Cyprus,'' he added.
Eurogroup finance ministers made no decision on a rescue package for Cyprus at a meeting in Brussels on Monday because negotiations on bank recapitalization are continuing. They said a decision would most probably be taken in March.
After Monday's Eurogroup meeting, German Finance Minister Wolfgang Schaeuble was quoted in media reports as suggesting that worries still persisted over Cyprus because of a perceived lack of transparency.
He said Eurogroup ministers were demanding “stronger surveillance’’ of money laundering and stronger transparency on bank fraud.
Stefanou has in the past insisted that Cyprus has “adopted and implemented high-level institutional frameworks in combating money laundering which is fully in line with EU law.’’
On March 1, a new Cyprus government will be sworn in following February presidential elections in which communist incumbent Demetris Christofias will not stand.
Christofias is seen as an obstacle to agreeing more reforms – such as privatising state-owned utilities – with the troika of international lenders.
The Cyprus Central Bank said on Saturday that a study into how much the country's Greek-exposed banking system needs as part of an EU bailout package has yet to be finalized.
Without a figure for bank recapitalization – the lion's share of an EU bailout – there can be no agreement on a final loan deal for Cyprus.
Nicosia applied for EU financial aid in June when its two largest banks asked for financial assistance, but agreement on the terms of the deal have dragged on.
In a draft agreement with the troika the amount for the banks was set at up to 10 billion euros as part of a total package which could reach 17.5 billion euros – matching the island's entire economy.
Stefanou said the government is “fighting hard’’ to lower the figure for bank recapitalization needs by persuading its EU partners not to adopt the 'extreme scenario' for Cyprus.
Although Cyprus has pushed through harsh austerity measures of around 1.2 billion euros in tax hikes and savings, fellow EU partners have called for more reforms.
Nicosia says it has done everything asked of it under the preliminary agreement with the troika – the European Commission, European Central Bank and the International Monetary Fund.
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