PRESIDENT NICOS Anastasiades yesterday met with his National Economic Council for the first time yesterday, one month after its appointment, paving the way for the top advisory body to get to work on restoring trust in the Cyprus economy.
Joined by Finance Minister Harris Georgiades, Anastasiades had a three-hour meeting with the ten-member body, headed by Nobel prize winner Christopher Pissarides.
Sources told the Cyprus Mail last night that the council agreed with the president to first focus its expertise on three main issues: the banking system, with particular emphasis on how to ensure the Bank of Cyprus’ survival, which remains in a critical condition; all the implications involving the euro currency, and the government’s policy for economic growth.
One source said the discussion was “wide and varied” and “very constructive”. Everyone was given a chance to speak in an open manner while the government appeared “very receptive” to various ideas.
Anastasiades had a chance to explain to the economists what exactly happened during the fateful Eurogroup meeting in March when Cypriot depositors woke up to the news that the troika had taken the unprecedented decision to impose a haircut on depositors of the island’s two largest and most systemic banks.
Another source said, now the dust has started to settle after the Eurogroup bombshell, it appeared the government was ready to take serious steps to rectify the woeful conditions of the Cyprus economy.
Speaking after the meeting at the Presidential Palace, Pissarides said the meeting focused on clarifying the framework within which the council will operate and liaise with the president and minister.
“We are satisfied with the decisions taken,” he said.
The president discussed with the team of experts the problems facing the Cypriot economy that need further study.
“Our aim is to make more detailed studies, we are all technocrats, our reports will be based on data and evidence to help those in power take decisions on the economy,” he said.
The Nobel prize winner said the council will cover all areas of the economy, focusing initially on the banking system, energy sector, fiscal policy, and growth programmes.
“The priority is to have an environment conducive to investments. The only thing that can limit unemployment is economic growth, and the competiveness of the Cypriot economy and the creation of new jobs,” said Pissarides.
Unemployment was “the most serious problem”, he said, adding that the short-term situation was not good.
“The austerity measures imposed on us do not help deal with unemployment and the various social benefits simply limit the costs of unemployment to families. Without economic growth, we can not constrain it. I do not believe, however, that we will reach the levels of Spain and Greece.”
The best way to return to economic growth is by returning confidence in the Cyprus economy. To do that, investors need to feel they can get a return on investments.
“Now, there is uncertainty in the banking system, which needs to be eliminated,” he said.
Vice-chair of the council, Stavros Zenios, told the Cyprus Mail that they had a long general discussion last night, clarifying administrative issues and the main areas of focus of the council.
“It was very positive and there is lot’s of good chemistry within the council. We are a committee of experts, not politicians. And we see eye-to-eye with the government on what is expected of us: to provide independent, informed expert opinion,” he said.
According to sources, the council will come up with a study within weeks on how to help the ailing Bank of Cyprus. As a result of the Eurogroup decision, the island’s largest bank was lumped with the debts and assets of the now wound down Laiki Bank, including a €9 billion-plus debt to the European Central Bank, and all of Laiki’s staff.
On Thursday, Georgiades criticised the Central Bank of Cyprus for not moving fast enough on the restructuring of the Bank of Cyprus, which continues to remain leaderless, having been run the past few weeks by an appointed administrator who will stay in charge until a CEO is appointed.
Finance Minister Harris Georgiades (left) looks at some documents before the meeting starts