AKEL Denies Wider Economy Needs Bailout

If Cyprus applies for an EU bailout, it will only be for the banks, said communist party AKEL's general secretary Andros Kyprianou in response to Finance Minister Vassos Shiarly's comments that a bailout will be for the needs of the wider economy as well as for cash-strapped financial institutions like Laiki Bank.

Critics said that the AKEL-led government cannot even support its own finance minister, who is struggling to find 1.8 billion euros for Laiki Bank, which needs to meet European Central Bank capital requirements by the end of June. Shiarly said that up until the end of May, the money had not been found from a third country and that it was 'urgent' to apply to the EU for a bailout.

Shiarly, who is a former banker, took over the finance ministry from Kikis Kazamias, who resigned ostensibly for health reasons. Most, however, believe that his resignation was due to interference from AKEL, which is anti-austerity and heavily pro-trade unions. Shiarly now appears to be on the same road as Kazamias and has his work cut out to achieve a reduction of the deficit to below three percent as required by the EU.

According to reports on state radio, he has proposed austerity measures which include taxation of luxury cars and homes of over 300 square meters, and accumulated wealth such as large-scale real estate holdings. Another measure aims to reduce tax evasion. The third is to reduce spending in ministries and the fourth is to tax roll-up cigarettes, a measure which has already been rejected by Parliament.

Government spokesman Stefanos Stefanou still insists that Cyprus' economy is in much better condition than other EU countries, glossing over the fact that there is an economic recession that has gone on for three successive quarters, amid ever-increasing government spending.

But opposition party DISY said that the state is virtually unable to meet its obligations and that "we all have to recognise that public finances are in deadlock". AKEL and President Demetris Christofias are indulging in misleading and irresponsible propaganda and that any application for the EU's financial support mechanism will be needed not only for the banks but for budgetary needs, said DISY.

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