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Cyprus, economy, Eurogroup, Jean-Claude Juncker, President Demetris Christofias, Troika

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• Juncker: Cyprus should be treated with care

CYPRUS was told yesterday in no uncertain terms that it must speed up negotiations with its international lenders to resolve its “very serious” economic problems, a clear sign that its EU partners think the island is dragging its feet.

“Cyprus and the troika will have to speed up the process, there is no time to lose and I am very confident that an answer to the problems of this country, and they are very serious, will be found in the next coming weeks,” said Eurogroup President Jean-Claude Juncker, after meeting President Demetris Christofias yesterday afternoon. 

Earlier, Juncker had asked Cyprus to clarify its intentions concerning the bailout it sought in June.

Cyprus applied for financial assistance from the EU and the IMF – the so-called troika -- to rescue its largest banks, which suffered huge losses from their exposure to Greece.

The troika, whose delegations visited the island twice on fact-finding missions, has submitted a 20-page document with their draft proposals in July but so far there has not been any indication as to when an agreement might be signed.

The government, which has repeatedly rejected suggestions it was delaying, has said it was preparing its own counter-proposals.

They will be presented and discussed with parties and unions before a final copy is handed over to the troika.

Earlier yesterday, speaking on the sidelines of the Eurogroup meeting that took place in Nicosia, Finance Minister Vassos Shiarly stressed Cyprus’ commitment to the process.

“The commitment is there and we will be proceeding as I indicated very soon very quickly,” he told reporters.

His comments came as reports claimed Cyprus was rapped during the meeting over the delay.

In a news conference afterwards, Juncker said: “We invited Cyprus to rapidly clarify their intentions with a view to resuming and concluding the negotiations regarding a possible financial assistance programme.” 

He repeated this after his talk with Christofias.

“I listened carefully to the president and the president, I think, listened carefully to me,” Juncker said. “At the press conference I gave earlier, I mentioned we want Cypriot authorities to clear their intentions and the meeting I had with the President was clearing up these Cypriot intentions.”

The finance minister denied Cyprus had been told-off, but he admitted there was a delay because of the August holidays.

“I think we have done a lot of work during August but not as much as perhaps we would have liked, perhaps even troika would have liked,” he said. “Don’t forget also that during the last 15 days we virtually did nothing else but prepare for these two meetings (Eurogroup and Ecofin) that as you know are very very important. We hold the (EU rotating) presidency and therefore we did the best we can.”

Shiarly said he will be on the phone to the troika first thing on Monday to make arrangements for the coming days.

IMF chief Christine Lagarde said yesterday she is looking forward to continuing the dialogue with Cypriot authorities in order to help the economy.

However, sources said she was not happy with the fact that the troika document had been leaked to the media and had communicated her displeasure to Christofias during their meeting on Thursday evening.

The government said the leak did not come from them, as the troika’s austerity proposals have already prompted the negative reaction of political parties and unions.

Published for the first time on Wednesday, the proposals are a mix of spending cuts and revenue raising measures: a 15 per cent cut in the state payroll by 2013; scrapping of 13th salaries in the public sector; cutting 13th pensions of between €1,000 and €1,500 by 50 per cent, and those over €1,500 by 75 per cent; taxing allowances in the public sector; extending a wage freeze until the end of 2015; a rise in taxes of tobacco, cigarettes, alcohol and fuel; an across-the-board downsizing of the civil service; and abolishing the heating fuel allowance and reducing other allowances such as the Easter and Christmas bonuses.