Cyprus rules out exit from eurozone

Cyprus yesterday ruled out any question of abandoning the eurozone, hours after the principal backer of its government floated the option if bailout conditions were too tough.

Cyprus, a eurozone member since 2008, was forced to seek aid from its EU partners and the IMF in June to support its two main banks battered by exposure to Greece.

“For the government and the president of the republic there is absolutely no issue of exiting either the eurozone or the EU,” government spokesman Stefanos Stefanou said.

Earlier, Andros Kyprianou, leader of AKEL, the main supporter of president Demetris Christofias’s left-wing government, told 24h.com.cy such an option could be considered if conditions imposed by lenders were unbearable.

Leaked documents show the troika have demanded pay cuts in the public sector, privatisations, and pension reforms. The suggestions will not go down well with a unionised public sector, particularly ahead of a parliamentary election due next year.

“If the troika insists on very painful measures to remain in the eurozone, should we dig our heels in and say we won’t leave the eurozone because this is important, and [that] we will remain, however painful the measures may be?” Kyprianou said in a video interview posted on 24h.com.cy.

A transcript issued later by the party said some remarks were misconstrued. It quoted Kyprianou, in response to a question on whether Cyprus should remain in the eurozone, as saying it was an issue requiring expert advice.

Government officials said they hope discussions with the troika can be concluded in October.

It is unclear how much aid Cyprus will require, with speculation running at €10bn.