When Kikis Kazamias was appointed as Finance Minister in August, economy couldn’t be worse.
The deadly explosion at Mari put economy into recession at the same time that tough measures and new creditors were demanded to avoid the bailout mechanism.
Some of the measures were taken and the finance needs of 2012 were covered.
However, things are now worse.
The name of the new Minister will be announced officially today in the sidelines of the mini reshuffle and it is more than certain that it will be banker Vasos Shiarlis.
The third Finance Minister of Demetris Christofias is called to face the greatest challenges of the banks and the fiscal stalemates from the constant shrinkage of the economy.
The experienced banker knows that if economy does not recover by the end of the year, Cyprus will not be in the position to adopt its commitment for a deficit cut below 3% by 2012.
The fiscal results of the first months of 2012 are already alarming. The government is in dilemma between a new measure taking that might hit demand and the injection of sources to tackle crisis.
Mr. Kazamias’ agenda is heavy. The new Minister is called to launch deliberations for COLA, to promote growth measures to the Parliament and to convince President Christofias on issues that caused friction in the relation between the Ministry and the Presidential Palace, such as the casinos.
At the same time, he has to deal with the refinancing of the Cypriot debt in 2013, when the Russian loan will be exhausted.
The most important issue of the agenda, however, will be the conditions in the banking sector.
The investments in Greek bonds and the large losses from the exposure to Greek private debt led all three biggest Cypriot banks to losses of €4.4 billion, looking for capital from existing and new shareholders.
Mr. Shiarlis knows that the capitalization needs deprive liquidity from the market, undermining recovery.
The new Minister must deal with the capital challenges that banks face in cooperation with current CB Governor, with whom he has good relations.
A possible state support is on top of the agenda.
Mr. Shiarlis is also expected to meet all former colleagues to discuss the cost of borrowing.
The deadly explosion at Mari put economy into recession at the same time that tough measures and new creditors were demanded to avoid the bailout mechanism.
Some of the measures were taken and the finance needs of 2012 were covered.
However, things are now worse.
The name of the new Minister will be announced officially today in the sidelines of the mini reshuffle and it is more than certain that it will be banker Vasos Shiarlis.
The third Finance Minister of Demetris Christofias is called to face the greatest challenges of the banks and the fiscal stalemates from the constant shrinkage of the economy.
The experienced banker knows that if economy does not recover by the end of the year, Cyprus will not be in the position to adopt its commitment for a deficit cut below 3% by 2012.
The fiscal results of the first months of 2012 are already alarming. The government is in dilemma between a new measure taking that might hit demand and the injection of sources to tackle crisis.
Mr. Kazamias’ agenda is heavy. The new Minister is called to launch deliberations for COLA, to promote growth measures to the Parliament and to convince President Christofias on issues that caused friction in the relation between the Ministry and the Presidential Palace, such as the casinos.
At the same time, he has to deal with the refinancing of the Cypriot debt in 2013, when the Russian loan will be exhausted.
The most important issue of the agenda, however, will be the conditions in the banking sector.
The investments in Greek bonds and the large losses from the exposure to Greek private debt led all three biggest Cypriot banks to losses of €4.4 billion, looking for capital from existing and new shareholders.
Mr. Shiarlis knows that the capitalization needs deprive liquidity from the market, undermining recovery.
The new Minister must deal with the capital challenges that banks face in cooperation with current CB Governor, with whom he has good relations.
A possible state support is on top of the agenda.
Mr. Shiarlis is also expected to meet all former colleagues to discuss the cost of borrowing.
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