Cyprus to do 'whatever it takes' to revive economy

The new finance minister of cash-strapped Cyprus vowed on Wednesday to do "whatever it takes" to sort out the EU country's teetering finances and put the economy back on track for growth. Haris Georgiades was speaking hours after President Nicos Anastasiades swore him in, warning of "difficult days ahead" for an island struggling to recover from a near financial meltdown and the need for a crippling eurozone bailout. Anastasiades said this would entail "firstly, collectivity and, secondly, consistency and fiscal discipline and all those measures that will contribute to kick-starting the economy as soon as possible." The new minister, a 40-year-old British-educated economist, vowed to implement the terms of the bailout "fully... we shall meet all time frames and meet all targets." "We... shall do whatever it takes to fix our public finances and put our economy back on track for growth.""Even though today's circumstances might be bleak, the medium- and long-term prospects remain excellent. We have received a blow but I'm absolutely confident we shall overcome," said Georgiades. Under the terms of the bailout, Cyprus will drastically reduce the size of its bloated banking sector, raise taxes, downsize the public sector workforce and privatise some state-owned firms. Cyprus is already in recession, with unemployment at around 15 percent and expected to grow sharply this year and next. Forecasts before the deal was agreed saw GDP contracting by 3.5 percent this year. On Tuesday, outgoing finance minister Michalis Sarris said "2013 will be a very difficult year, and the beginning of 2014 will also be difficult. Beyond this I believe the prospects are positive."Georgiades, who became labour minister when Anastasiades was elected in February, was appointed after Sarris stepped down on Tuesday. Sarris had been chairman last year of failed Laiki Bank, whose collapse was a major contributor to the crisis. He said he was resigning to cooperate with a panel of judges appointed to investigate the causes of the crisis. His departure came as the government wrapped up talks with the IMF, European Commission and European Central Bank that will open the way for Cyprus to receive a 10-billion-euro ($12.8 billion) bailout. The deal will see Cyprus receiving the loan with an interest rate of between 2.5 and 2.7 percent, repayable over 12 years after a grace period of 10.On Wednesday, International Monetary Fund managing director Christine Lagarde said the IMF's contribution would be approximately one billion euros. "This is a challenging programme that will require great efforts from the Cypriot population," Lagarde said in a statement, but it "provides a durable and fully financed solution to the underlying problems facing Cyprus and provides a sustainable path toward a recovery." Under the final deal, Cyprus won a two-year extension, from 2016 to 2018, to get its public finances in order. Cyprus should get the first payment from the bailout next month after the rescue accord is formally ratified, the European Commission said. Also sworn in on Wednesday was Zeta Emilianidou, who becomes the first woman in the cabinet and replaces Georgiades at the labour ministry. Anastasiades told her: "The ministry you are undertaking certainly requires great sensitivity. It is a ministry that deals with the government's social policy for vulnerable groups" and with industrial relations.Banks have been operating under stringent capital controls since they reopened last Thursday, after a near two-week lockdown prompted by fears of a run on deposits. The central bank has been progressively easing these restrictions, and has now raised the limit on business transactions from 5,000 euros to 25,000 and allowing people to write cheques of up to 9,000 euros. Thus far, there has been no labour unrest in Cyprus, but bank workers union ETYK called a two-hour stoppage for Thursday over fears that pension funds at Laiki and Bank of Cyprus are not being protected under the bailout. Last week, Anastasiades said every effort would be made to preserve provident (pension) funds at Laiki and Bank of Cyprus.