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Cyprus News Agency: News in English, 12-01-28

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From: The Cyprus News Agency at <>


  • [01] Finance Ministry: Cypriot economy has excellent prospects for the


  • [01] Finance Ministry: Cypriot economy has excellent prospects for the future

    The economy of Cyprus is based on solid foundations and has excellent prospects for the future, the Ministry of Finance stresses in a press release issued as a response to Fitch Rating Agencys decision on Friday to downgrade the Cypriot economy.

    Fitch Ratings concluded on Friday its review of the six Eurozone sovereigns (Belgium, Cyprus, Ireland, Italy, Slovenia and Spain) it placed on Rating Watch Negative (RWN) on 16 December 2011. Cyprus LT IDR was downgraded to `BBB-` from `BBB`, negative outlook ST IDR was affirmed at `F3`.

    The Ministry of Finance in its announcement points out that despite Fitchs decision, Cyprus remains within the acceptable investment area.

    Furthermore, it notes that despite adversity and negative external influences, the Cypriot economy is based on solid foundations and shows excellent prospects for the future.

    ``The ability, openness, hard work and flexibility of the business people, together with the high quality level of the workforce and the social cohesion of Cyprus constitute today, as they have in the past, the cornerstone of Cyprus economic progress,`` the Finance Ministry states.

    It notes that with this in mind, the government of Cyprus, in collaboration with the private sector, will soon promote a package of development measures.

    Furthermore, it stresses that the Ministry, in collaboration with the Central Bank of Cyprus, systematically monitors the management of challenges in the financial system.

    The Ministry of Finance expresses conviction that banking institutions will be able to implement their plans to obtain the funds needed, with their own actions.

    ``The Ministrys faith to the banking system in Cyprus is proved in practice by its systematic deposits in banks, it is noted.

    It adds that on the day Fitch decided to downgrade Cyprus economy, the Ministry of Finance was auctioning treasury bills with banking institutions which offered 164% of the amount requested by the Ministry.

    As regards the cost of living allowance (COLA), the Ministry notes that through a constructive social dialogue the necessary changes will be achieved, while respecting social justice.

    According to Fitch, all the ratings have been removed from RWN, with the Negative Outlook on all six countries indicating a slightly greater than 50% chance of a downgrade over a two-year time horizon.

    As Fitch Ratings noted, the downgrade for Cyprus, and the additional one-notch cuts for Italy, Spain and Slovenia (i.e. a total of two notches for each) reflect country-specific concerns primarily related to the banking sector in Cyprus and Slovenia, an adverse shift in the interest-rate growth differential and hence public debt dynamics in Italy and a significantly worsened fiscal and economic outlook in Spain.

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