Cyprus: Possibility to Turn to EFSF “Serious”, Says Government

There is a serious possibility the Cyprus government might have to turn to the European Financial Stability Facility (EFSF) in order to get support for its banking system, Acting Government Spokesman Christos Christofides said on Tuesday.
Speaking to the press, Christofides clarified that if this happens, it will be solely to support the banks and not because of Cyprus’ budget deficit which is expected to be 2.5 or close to 3%.
“Cyprus will not turn to the EFSF because its deficit will be 2.5 or 3%, which falls under the Maastricht criteria, but because we must support our banking system,” he said.
He also said that the government is doing its best in order to cope with the very difficult situation the exposure to Greek bonds has created and in doing so, it needs the support and the cooperation of each and everyone, he stressed.
Asked if the government can secure funds the banking system needs from other sources, without having to turning to the EFSF, he said that “we are making a lot of effort, however the possibility to turn to EFSF is a serious one.”
He noted that with the support of the banking system and the constraint of the deficit under 3%, the government will be able to be convincing in the eyes of the international markets and will be able to rebound.
The Acting Spokesman reiterated that the government’s aim is for the deficit to be 2.5%. However he noted that in the midst of the global financial crisis, if this record ultimately falls under 3%, within the Maastricht criteria, but not exactly 2.5%, “nobody can argue that this is a catastrophe for our economy.”
In regards to new measures by the government, he said that they will be socially balanced and will aim to boost growth.
“These measures will not follow the logic of continuous and austere cuts which will lead us to a vicious circle of economic depression like it happened in Greece,” he added.
(source: cna)