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Christofias Blames Capitalist System for Economic Crisis

cyprus economic crisisPresident Demetris Christofias has blamed the 'global capitalist system' for problems in Cyprus' economy, saying that his government did not create the crisis.

The president has been widely criticised for failing to take prompt action on the island's economic problems, with analysts saying that measures to cut state spending should have been taken three years ago when the problems first arose. Differences between the left-wing economic policies of his government and the more conservative approach of political opposition parties have widened in the wake of the deadly explosion at Mari, which damaged the island's main power plant and further weakened the economy.

The left-wing approach favoured by the president has had a definite effect on current finance minister Kikis Kazamias' 2012 Budget, which actually forecasts a rise in public debt in 2012 and a rise in public sector wages by three percent to 2.82 billion euros.

But earlier this week, the IMF delivered its most serious warning on risks to the economy yet. The government needs to take bold corrective actions and set the stage for the resumption of economic growth, based on the underlying strengths of the Cypriot economy, said the IMF in its latest findings. A failure to act now would lead to more serious situations developing, like the need for an EU-IMF bailout.

As long as the president continues to view the situation in terms of communist versus capitalist scenarios, the government will not get serious about cutting the deficit and public spending on the civil service. As the IMF pointed out, however, there is no more room to maneouver and time is running out.

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