Cyprus News Agency: News in English, 09-05-27

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From: The Cyprus News Agency at <http://www.cyna.org.cy>

CONTENTS

[01] GOVERNMENT BONDS

[02] FM UNFICYP

[03] REHN CYPRUS TALKS

[04] CYPRIOTS EP ELECTIONS

[01] GOVERNMENT BONDS

In statements after the closing of the book building, Stavrakis said although the bond limit was set at 1 billion euro, the Cypriot four-year bond issue was over-subscribed, receiving bids for the ``unprecedented`` amount of 5.5 billion euro.

``Taking into account the huge success of this issue we decided to increase the limit to 1.5 billion euro from of 1 billion, Stavrakis said in statements to the press, adding that ``it is probably the biggest oversubscription of bonds of a similar size by a European government for many months.``

The fresh capital to be injected to the Cypriot banking system early June will be used to refinance maturing public debt amounting to approximately 1.7 billion euro.

``I think that today the Cypriot economy and the policy we follow received a vote of confidence,`` Stavrakis added.

He noted that interest rate was set to a competitive level of 3.85% which is quite lower than the approximately 5% rate Cyprus is paying for current medium-term bonds, while a 5% rate was provisioned for in the 2009 budget.

According to the Finance Minister, 1.25 billion euros will be allocated to foreign investors, including Central Banks, commercial banks, insurance firms, mainly from countries such as the US, United Kingdom, Germany and France, while the remaining amount of 250 million euro will be given to Cypriot investors.

Replying to questions, Stavrakis said that the proceeds from the issue will be injected into the Cypriot system on June 3, 2009.

He underlined that these borrowing will not affect the 2009 public debt because it will be refinancing the public debt maturing in 2009, which drew higher interest rate that the 3.85%.

``Therefore we gain in two ways, cheaper interest rate and additional liquidity from foreign investors,`` he added.

Furthermore, Stavrakis announced that international rating agency Fitch reconfirmed his 2 A- rating for Cyprus in a time during which both Fitch and other rating agencies downgrade other European countries due to the problems they face because of the financial crisis.

Replying to a question on the 2009 growth rate, Stavrakis recalled that Cyprus growth rate in the first quarter reached 1.4% of GDP in real terms and 1.6% after seasonal adjustments and that April presents the same levels. He added that these developments show that ``our forecast for a very much higher growth rate than the international organizations project will be realized``.

International Monetary Fund and the latest European Commission forecasts agree that Cyprus 2009 growth rate will reach 0.3% of the GDP. The Commission`s forecast show that Cyprus will be the only country in the Euroarea to register growth in 2009.

Meanwhile Stavrakis said that the government would not suspend its austerity measures. ``The austerity measures are an important financial tool which will assist further stimulation of the economy,`` he added. Last Monday Stavrakis said that the Ministry intents to save 250 million euros from cuts in the public service`s non-productive expenses.

Cyprus Finance Minister held two roadshows in London and Paris last week to promote Cyprus` international 4-year bond, while the strong demand rendered two additional roadshows scheduled for Frankfurt and Amsterdam unnecessary.

[02] FM UNFICYP

Kyprianou said that all draft resolutions are the subject of consultations, and noted that «our goal is to have objective and fair resolutions both legally and politically».

«We believe that the peace-keeping force has fulfilled an important assignment in Cyprus both as regards security and politics and has yet a very important role to play to resolve the Cyprus problem», the Foreign Minister said, suggesting that there should be no alteration of the role or the size of the Force, as long as the Cyprus problem is still pending.

He also said that as long as negotiations on the Cyprus question are going on the resolution must not contain a wording that can lead to misinterpretations or question the presence of UNFICYP in Cyprus before a solution of the Cyprus problem.

[03] REHN CYPRUS TALKS

Rehn was replying to a written question by Cypriot MEP Yiannakis Matsis who asked how the Commission could exert pressure on Turkey so that Ankara undertakes its responsibilities in Cyprus, where the Turkish army, since 1974, occupies one third of the islands territory and brings illegal settlers to the northern areas of Cyprus.

According to Rehn, the negotiations for Turkeys accession to the EU are being carried out on the basis of the principles and procedures of the negotiating framework agreed by all EU member states in 2005.

Rehn adds that the Commission firmly urges the leaders of the two communities in Cyprus to continue negotiations under UN auspices with the aim to reach the overall settlement of the Cyprus problem by the end of 2009.

[04] CYPRIOTS EP ELECTIONS

According to the Eurobarometer survey, conducted between 4 15 May, 48% of Cypriots express certainty they would cast their vote at the upcoming EP elections, while 11% say they would for sure not go to the polling stations.

Invited to say when the EP elections will take place, 71% of Cypriots the fourth highest in the EU - gave the correct answer. The highest percentage was recorded in Malta (80%), followed by Greece (78%) and Hungary (74%).

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