CYPRUS ECONOMY FACT SHEET - March 2014
House of Representatives approves privatisations’ bill
The plenary of the House of Representatives approves on 4 March 2014 a new bill of law on the privatization of semi-governmental organisations (SGO’s).
The government was forced to submit a new draft bill before the House of Representatives, after incorporating amendments submitted by parliamentary parties, because the initial bill submitted was rejection by the House on 27 February 2014, with 25 lawmakers voting in favour, 25 against, and five abstentions.
The bill, that provides for the privatisation of seven SGOs, among which the Cyprus Ports Authority, the Electricity Authority of Cyprus and the Cyprus Telecommunications Authority has caused a series of protests and strikes by the employees of these organisations, who strongly oppose it.
The implementation of a plan covering the privatization of the Cyprus Telecommunications Authority and the Cyprus Ports Authority by 2016 and the Cyprus Electricity Authority by 2018 to generate €1.4 billion in order to restore public debt sustainability, is one of the preconditions of the bailout agreement between the Republic of Cyprus and its international lenders, with the European Commission, the European Central Bank and the IMF, collectively known as the Troika.
Following the rejection of the bill on 27 February 2014, a European Commission Spokesperson pointed out that the approval of the bill is a prerequisite for the disbursement of the next installment for Cyprus. The bill is approved by 30 votes in favour and 26 against.
Signing of recapitalization agreement for the Coops
On 28 February 2014 the Ministry of Finance, the Cyprus Cooperative Central Bank (CCB) and the European Stability Mechanism sign an agreement in Nicosia, according to which €1.5 billion will be injected into the Cooperative Sector, thus concluding its recapitalization.
After the signing, the Minister or Finance highlights that the agreement formalizes the stabilization of the Coops. Pointing out that the Coops “comprise an important pillar of the efforts to restart the economy” the Minister also says that the agreement, along with the continuation of the Coops’ restructuring and merger procedure “allows us to really be optimistic.”
The European Commission had already announced on 24 February 2014, that it approved the restructuring plan and restructuring aid measures for the Cyprus Cooperative Credit Institutions, thus paving the way for the government capital injection of €1,5 billion to cover the sector`s capital shortfall.
In its relevant statement, the Commission had pointed out that: "The European Commission has found recapitalisation and restructuring aid measures in favour of the Cooperatives Credit Institutions and their central body, the Cooperative Central Bank Ltd. (together "the cooperative banking sector") in Cyprus to be in line with EU state aid rules. In particular, the measures will enable the cooperative banking sector to become viable in the long term without continued state support, while limiting the distortions of competition created by the aid."
Contract for casino consulting services is signed
On 28 February 2014 the contract agreement for the provision of consulting services to the Government of Cyprus for the licensing of an integrated casino resort in Cyprus is signed between the Republic of Cyprus and Deloitte Ltd, which has been selected, through an international public tender procedure, on 29 January 2014.
On behalf of the government the contract is signed by the President of the competent Steering Committee, the Permanent Secretary of the Ministry of Energy, Commerce, Industry and Tourism, Dr Stelios Himonas, while it is also announced that the competent Ministerial and Steering Committees, both of which have been appointed by the Council of Ministers on 20 February 2014, have already held their first meetings with the consultants.
Economic sentiment improves
A pan- European Economic Sentiment Indicator is published on 27 February 2014, showing a record high in Cyprus since July 2011. The survey is conducted on a monthly basis by the Directorate General for Economic and Financial Affairs (DG ECFIN) and includes the expectations of entrepreneurs on how the industry, construction, services, retail and consumers will perform as well as consumers’ expectations.
In February the indicator was recorded at 92.9 units for Cyprus up from 91.3 units in January. The indicator had reached its lowest point in April 2013, but since then the indicator as regards Cyprus has been following an upward trend.
Easing of bank restrictions
On 21 February 2014 through a decree issued by the Minister of Finance, the further easing of the restrictions on bank transactions is announced, signaling the abolition of the restrictive measures relating to fixed term deposits and an increase of the current limit with respect to the transfer of money within the Republic.
According to the Ministry of Finance, the easing of the restrictions could take place, because, based on the Roadmap for the gradual relaxation of the restrictive measures which was published in August 2013, all milestones of the second stage have been met. These include the disbursement of funds under the macroeconomic adjustment program, for the recapitalisation of the COOPs, the submission of the COOPs restructuring plan to the European Commission, the recapitalisation of Hellenic Bank and the approval of the Bank of Cyprus’ restructuring plan by the Central Bank of Cyprus.
Source: Press & Information Office, Republic of Cyprus