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Cyprus News Agency: News in English, 11-03-31

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From: The Cyprus News Agency at <>




    Minister of Finance Charilaos Stavrakis has said that the decisions made by rating agencies concerning Cyprus` rating are out of the government`s control.

    Stavrakis` remarks came one day after Standard and Poor`s decision to lower its rate for Cyprus to A-/A-2 from A/A-1. The Minister announced that a new rating by Fitch will follow within the next weeks.

    Citing the exposure of the Cypriot commercial banks to Greece, S&P noted that ``the ratings of Cyprus could be lowered further if we perceive an increase in the embedded credit risks in the Cypriot financial system, as evidenced by further deterioration either in credit conditions in Greece or Cyprus` own funding base.``

    According to S&P, Cyprus domestic financial system`s total exposure to Greece (loans and securities to household, corporate and government sectors) has grown to 1.7 times of the island`s GDP. The largest component of this exposure, estimated at 21.8 billion euro, is loans extended through Cypriot subsidiaries in Greece to Greek customers, whereas the remaining exposure comprises Greek sovereign and bank debt totaling 6.4 billion.

    ``We do not agree with these (S&P`s) positions, but this however is their position and conclusion and it is extremely unfair to blame the government for the banking system for which it has no responsibility,`` Stavrakis said.

    Responding to a question whether further downgrades could be averted, Stavrakis said ``unfortunately to some extent if the worst happens in Greece, it is highly likely that they will not stop, because the rating agencies consider the Cypriot and the Greek banking systems connected.``

    He stressed that the reduction of Cyprus` fiscal deficit and public debt as well as the correction of the economy`s structural problems were always among its goals.

    ``However the credit agencies see a connection of the two banking systems and reach some conclusions which, to a large extent, are out of our control,`` he noted.

    Concerning Cyprus` future borrowing from international markets, Stavrakis said ``we should be extremely flexible to draw the sums we need either from the international or the domestic market.``

    He recalled that recently Cyprus has borrowed large sums from the domestic market, creating a reserve which would assist the government to cover its needs for refinancing maturing debt for the following months, adding that resorting to international markets depends on the rate given by international investors and the situation of the markets at the given time.

    ``Judging by the way things stand at present, the emphasis is on local borrowing, without ruling out returning to international borrowing,`` he concluded.


    The President of the House of Representatives Marios Garoyian has expressed his disappointment over the stagnation in the negotiations between the Israeli and Palestinian sides, as well as for the lack of progress in the negotiations for a Cyprus solution, due to the intransigence of the Turkish side. Garoyian was speaking during a meeting with Azzam Al-Ahmad, Chairman of the Fatah movement parliamentary group at the Palestinian Legislative Council, who is on an official visit to Cyprus, as an envoy of the Palestinian President Mahmoud Abbas.

    According to an official announcement, Garoyian expressed Cyprus support for the establishment of an independent, sovereign, territorially conjoint Palestinian state, which will exist side by side with the state of Israel. He added that Cypriot delegations have consistently supported at international fora the enforcement of UN resolutions regarding the Pelestinian question and thanked the Palestinian side for the support it is offering to Cyprus in the deliberations of the Organization of the Islamic Conference.

    Al-Ahmad expressed the firm position of the Palestinian National Authority, in favor of the reunification of Cyprus and its people, as well as in reaching a final solution, without interference by third parties. He thanked the political leadership of Cyprus for its support to the Palestinian people and for hosting numerous Palestinian refugees on the island.


    Chairman of the Group of the Progressive Alliance of Socialists and Democrats in the European Parliament Martin Schulz said on Thursday that discussions on the legal basis of the proposed EU regulation for direct trade with the Turkish occupied areas of Cyprus were ongoing and expressed hope that its legal basis would be clarified.

    Speaking in Nicosia during a press conference, Schulz said ``economic progress is needed and necessary, and all the measures leading to more economic development are necessary but on the basis of absolutely clarified legal framework and for the time being the legal questions are not sufficiently solved.``

    ``Discussions on the legal basis are ongoing and I hope that we will have a clarification,`` Schulz added. Schulz was received earlier by Foreign Minister Marcos Kyprianou with whom he discussed the Cyprus problem, Euro-Turkish relations and the direct trade regulation.


    Communications and Works Minister Erato Kozakou Marcoullis has underlined the need for further reforms on the establishment regulation of the European Maritime Safety Agency (EMSA), in order to clarify its duties and role.

    Speaking at the EU Transport Ministers meeting in Brussels on Thursday, Marcoullis noted that EMSAs main responsibilities are the maritime safety and the prevention of pollution from ships and therefore the suggested reforms should not be drawn away from these duties. In her intervention, Marcoullis also noted Cyprus constructive role in the International Maritime Organization (IMO) which is the United Nations` specialized agency responsible for improving maritime safety and preventing pollution from ships.

    The Cypriot Minister expressed her disappointment for the fact that Cyprus has not been invited to participate in the 4th Ministerial Convention of the International Transport Forum which will take place in Leipzig next May. In the past, Cyprus had applied to become a member of the Forum, however Turkey has vetoed its actions. Marcoullis has called on EU Ministers to support Cyprus application, noting that Cyprus is a leading maritime country and therefore we believe that we should become member of the Forum.

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