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Cyprus News Agency: News in English, 06-05-31

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From: The Cyprus News Agency at <>




    The benefits and advantages of Cyprus` accession to the Eurozone were outlined during launch of the campaign to enlighten the public on the Euro.

    President of the Republic Tassos Papadopoulos said ``the advantages of introducing the Euro are clear and indisputable.``

    He dismissed fears that prices would go up overnight due to profiteers taking advantage over the currency switch.

    ``The experience of countries that have adopted the Euro indicates that this fear is unfounded and exaggerated,`` he said.

    President Papadopoulos said the time of accession into the eurozone is not determined by the government.

    Assuring that social benefits will not be sacrificed in efforts to join the Eurozone, President Papadopoulos said that it was not by choice that the government decided to apply for accession to the Eurozone but because it was compulsory.

    President Papadopoulos said that with austerity measures, controlling expenses and not introducing new taxes, the government was able over the past two years to restrict the fiscal deficit from 6.3% to 2.4%, noting that it will be further reduced to 2% by the end of 2006.

    Social benefits rose by 9%, while the public debt ratio went down from 71.7% in 2004 to 70.3%, he said and expressed hope that by 2009 it will be reduced to 53.6%.

    President Papadopoulos said there is concern that social benefits will be reduced once the Euro comes into place therefore it would be better to postpone accession into the Eurozone. However, he stressed that ``accession into the Eurozone is not determined by us, nor can its timing be moved according to our will, by one or two years.``

    He assured that ``this government will not sacrifice the social state or restrict social benefits to low income classes, to achieve the aim of Eurozone accession, however important this aim is.``

    On concerns that the introduction of the Euro will mean an increase in prices, President Papadopoulos said that experience from other countries shows that these concerns ``are unfounded and exaggerated.``

    The island`s largest party, AKEL, wants to delay adoption of the Euro by one year to ease the burden of transition on lower income earners.

    Minister of Finance Michalis Sarris stressed the importance of introducing the Euro in Cyprus.

    He reiterated that the target date is 1st January 2008 and that the active participation of the private sector is of utmost importance for the successful formation and implementation of the communications strategy which is a vital element in the national action plan to introduce the Euro.

    Among the benefits that arise from adopting the Euro, Sarris said, is the creation of a basis for economic and social progress, lower interest rates as well as lower loan costs, eliminating the exchange danger in Euro transactions, immediate access to Eurozone capital markets for businesses, greater transparency in prices and strengthening investment activity.

    Central Bank Governor Christodoulos Christodoulou stressed the responsibility of the Central Bank in achieving accession to the Eurozone the soonest.

    He said the Central Bank supported with consistency that Cyprus has every economic and social interest to adopt the Euro the soonest, noting that today`s launching of the Euro campaign has special significance.

    Banknote Director of the European Central Bank Antti Heinonen, in his speech, talked about the challenges of introducing Euro banknotes and coins. He said among the success factors are the early involvement of all stakeholders, massive frontloading, swift adjustment of ATMs, strict contingency plans and extensive communication.

    He also said the differences of future changeovers with the 2002 Euro cash changeover are that Euro banknotes and coins are already there, the period between the Council decision and the Euro day might be very short, while in most cases no transitional period is envisaged while new circumstances require contingency plans.

    Director General of Economic and Financial Affairs at the European Commission Klaus Regling said that Cyprus` debt ratio, at just under 70% of GDP, remains too high. ``If current budgetary plans are implemented, it will reach 53.2% in 2009,`` he said.

    This, he added, ``would be good news for Cyprus` economy and for future generations.``


    German Minister of Foreign Affairs Dr. Frank-Walter Steinmeier expressed the hope that Turkey will ratify the Ankara Agreement, extending its customs union agreement to all EU member states by the end of the year.

    He was speaking during a meeting in Berlin with his Cypriot counterpart George Iacovou who is on a two-day visit to Germany.

    The two ministers examined issues of European interest such as the future of Europe and the Constitutional Convention in the light of the discussions held on 27 and 28 May at the Informal EU Foreign Ministers` meeting in Vienna, an official statement said.


    The Cypriot government deems that the UN Secretary-General believes the conditions are not right at the moment to start new negotiations for a Cyprus settlement.

    Government Spokesman George Lillikas was referring to a letter sent by UN Chief Kofi Annan to Turkish Cypriot leader Mehmet Ali Talat, as reported in the Turkish Cypriot press.

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