FINANCE Minister Charilaos Stavrakis yesterday sought to assure the public about the economy after the US banking crisis sank global stock markets, including Cyprus.
The main Cyprus Stock Exchange (CSE) index fell 5.67 per cent – its lowest point in two years – in line with a 5.0 per cent fall in the FTSEurofirst 300 index of leading European shares.
Cyprus’ three main banks took a hammering in the wake of the US crisis but parallel CSE indexes were affected across the board. Bank of Cyprus stocks plummeted 7.16 per cent, Laiki Bank 3.5 per cent and Hellenic Bank 4.52 per cent.
Close to 50 shares were down yesterday compared to only six gainers, while €8.3 million worth of shares changed hands.
The Minister refused to comment on development in the CSE yesterday. Other than to say it was noted that they had been affected, Stavrakis said:
“I think it is prudent that the Minister of Finance and the government never comment on current stock prices, which are determined on the open market. Our concern is to maintain a strong background for the overall economy and financial system.
He said that despite the immediate impact of what happened yesterday in the US, which also affected other EU economies, the Cyprus economy was stable and still making good progress.
“The Cypriot economy at the moment is going against the tide and is one of the best in Europe,” he said at a news conference.
“The economy is moving at very satisfactory levels and the budget, which will be announced in two days, is designed to maintain this strength.”
Stavrakis warned however that if the global crisis persisted, it would affect Cyprus
“If the global economic crisis lasts for a long time, certainly the Cypriot economy will be affected. This is true and inevitable,” he said.
Asked about the problems in the British economy, and its possible effects on Cyprus, Stavrakis said the UK was an important economic partner and inevitably its problems would impact us.
The Minister did say yesterday’s events in the US had a positive side.
“The only encouraging thing coming out of this big and unprecedented financial crisis is that due to the decrease in demand for oil, resulting from the downturn in the global economy, prices have fallen significantly, which is a shot in the arm for the Cypriot economy.”
He said this would soon translate to lower fuel prices for consumers, and also lower electricity prices.
