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Troika team in Cyprus to study state-run firms

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(Globalpost/GlobalPost)

A delegation from the troika of international lenders was in crisis-hit Cyprus on Wednesday to gather data on semi-governmental organisations as part of a deal to finalise a bailout package, officials said.

Technocrats were in Nicosia to check the assets, projects and accounts of state-run enterprises such as the electricity and telecoms authority.

Under a draft memorandum signed between the government and the troika, privatisation of such bodies may be necessary to make a loan agreement sustainable.

The anticipated 17-billion-euro ($22.3 billion) rescue package for Cyprus is roughly equivalent to a year's output of the Cypriot economy.

Meetings of the delegation from the European Union, European Central Bank and International Monetary Fund with officials from state enterprises were being held at the finance ministry on Wednesday.

"The meeting was purely about collecting information about the organisation's financial situation, future plans and the way we work," electricity authority general manager Stelios Stylianou told reporters.

Eurozone finance ministers said Monday that a long-delayed bailout deal could be struck by the end of March after Nicosia agreed to submit its financial sector to independent scrutiny over concerns of large-scale money-laundering.

Long resisted by the previous, communist-led government, the first face-to-face talks between the other 16 ministers from the eurozone and their new Cypriot counterpart, Michael Sarris, resulted in the deal to break a deadlock.

It represented an "important step forward," European Union Economic Affairs and Euro Commissioner Olli Rehn said, and "the most convincing means of effectively addressing persistent concerns" about the Cypriot finance sector.

As well as money-laundering fears, doubts over debt sustainability in the medium term and a programme of privatisations demanded by the eurozone and IMF had also proved sticking-points.

But following the February 24 presidential election victory of rightwinger Nicos Anastasiades, the signals from the new government on privatisation appear less hostile than under the previous administration.

On debt sustainability, however, Cyprus has dismissed any suggestion that investors or bank depositors should be forced to take part of the burden directly, as some in Europe have suggested.

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http://www.globalpost.com/dispatch/news/afp/130305/troika-team-cyprus-study-state-run-firms