Banking sectors problems and not public finances/debt caused economy’s destruction

 Written statement by Georgos Loucaides, AKEL C.C. Press Spokesperson,

31st March 2014, Nicosia

One year after the catastrophic Eurogroup decisions, Oli Rehn in his interview to “Fileleftheros” newspaper reiterated the position that it is the banking sector’s problems that provoked the destruction of the economy and not the state of Cyprus’ public finances and debt.

Oli Rehn stated literally the following in his interview: “Cyprus’ problems developed gradually over many years. At the heart was the oversized banking sector which prospered by attracting foreign investment with very favourable terms. This influx of capital also contributed to the sharp rise in the purchase of real estate and the accumulation of external imbalances. The depth of the banking problems came from the poor practices of managing dangers. Due to the lack of adequate supervision the two big Cypriot banks were left to create a very great accumulated exposure to dangers. It was the problems in these banks that provoked the problems of debt and the economic decline of Cyprus and not the contrary.”

We do not need to add anything else to Oli Rehn’s statements, only that the cause of today’s problems are still the state of the banking sector and the credit crunch caused by the decisions taken last March. That is where we must mainly focus on in order to find solutions and certainly not the shifting of the economic burdens on the backs of the people, workers and citizens, as the government and ruling forces are doing, receiving the congratulations of the Troika.