NICOSIA – While welcoming the European Central Bank’s 1-trillion euro ($1.1 trillion) bond-buying program, Cyprus’ Finance Minister Haris Georgiades said it must be coupled with ongoing reforms for his country’s recovering economy.
“I’m a strong supporter of this new policy of the ECB and I do believe it will help the euro zone as a whole and, of course, Cyprus, and the benefits will be multi-dimensional,” Georgiades told CNBC.
“It will be a stimulus for economic activity and it will facilitate the re-entry of countries like Cyprus to the international capital markets. So it makes our double objective of economic recovery and growth – and also a return to capital markets – easier.”
But he said the so-called Quantitative Easing (QE) program should go hand-in-hand with reforms in countries such as Cyprus experiencing difficult economies.
Cyprus began imposing austerity and other measures two years ago in return for 10 billion euros in international loans to save the banks from bad management decision and to prop up the economy.
“There is a dilemma regarding the QE policy and whether it will be a disincentive to the continuation of economic reforms, structural changes and fiscal consolidation,” Georgiades said, speaking to CNBC in Nicosia in Cyprus where the central bank met.
“But my answer is that we will continue to execute prudent fiscal policy (and) our agenda of structural reform. But the ECB should essentially lend a hand to this effort.”
Currently, the government bonds of Cyprus and Greece – both recipients of financial bailouts – do not qualify for the ECB’s program until the economies implement key reforms but Cypriot President Nicos Anastasiades met with ECB President Mario Draghi to see if the country could be included.Source: The National Herald