Court decisions threaten economic stability of Cyprus: minister

Source: Xinhua| 2019-06-10 23:45:14|Editor: Mu Xuequan
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NICOSIA, June 10 (Xinhua) -- The biggest danger to the Cypriot economy being destabilized is court decisions declaring unconstitutional austerity measures imposed as part of the 2013 bailout of Cyprus by the Eurogroup and the International Monetary Fund, Finance Minister Harris Georgiades said on Monday.

"The economy is strong and despite unfavorable external factors, it will continue to grow at a good pace, but court decisions which raise demands by employees of the wider public sector constitute the biggest destabilizing factor," Georgiades said in an interview with Cypriot state radio.

Georgiades was commenting on a post-bailout program surveillance report issued on Friday by the European Commission, stating that the Cypriot economy is essentially sound, though it needs to be shored up by the introduction of pending reforms and considerable reduction of non-performing loans held by the banks.

The court decisions he referred to said that cuts totaling 12.5 percent to salaries and pensions and a 3 percent contribution towards fiscal consolidation demanded by international lenders as conditions for the 10-billion-euro bailout program were an encroachment on personal property which is banned by the constitution.

Several hundred public employees have applied to the administrative court, demanding that their salaries be restored to their previous level. The minister also said that some lawyers faxed papers to public employees inviting them to join in mass court suits.

"I wonder whether these practices are in line with the ethics of lawyers," he said.

Georgiades said that a gradual restitution of salaries and pensions over several years would be safe for the economy, but a once-out return to the pre-crisis status would cause a dangerous economic upheaval.

He pointed out that the government and the main trade unions have already reached an agreement, approved by parliament, for a gradual return to former salary scales by the end of 2023.

"The state is decided to prevent a sudden shock to the economy one way or another, even if it has to modify constitutional provisions," Georgiades warned.

He said that this move would be made inevitable if the government failed in an appeal against decisions issued by the courts on the salaries issue.