NICOSIA - Cyprus delaying a bailout request for rescue aid ensured that the terms of a Troika loan would be catastrophic, Central Bank chief Panicos Demetriades said yesterday.
Demetriades told a public enquiry into Cyprus’ financial meltdown that delaying the inevitable had cost the island’s economy and its banking system dear.
He said a request should have been submitted to the EU’s support mechanism by the end of 2011 instead of July 2012.
The banker said Cyprus could have secured better terms if it applied for a bailout soon after the Greek debt haircut in late 2011 which cost Cyprus banks an estimated €4.5 billion.
And even once making the request Nicosia only reluctantly sign a memorandum of understanding with international lenders in March of this year.
“A request should have been submitted by the end of 2011 or early 2012 as it was evident that the banks were unable to secure the required capital and there were instabilities in the Cypriot economy,” said Demetriades.
He said when appointed in May 2012 he quickly realised that all efforts were directed at avoiding a bailout memorandum, as this was the position of the government.
“Each day that went by without an agreement put the survival of the island’s two biggest lenders at further risk and jeopardised the provision of basic bank services to businesses and households,” said Demetriades.
Then president Demetris Christofias was reluctant to sign a painful bailout deal hoping that he could borrow the money from elsewhere such as Moscow.
It was left to his successor Nicos Anastasiades to sign an unprecedented €23b bail-in/bailout package.