BUSINESSES are having difficulties in securing bank loans due to the global credit crunch, the government heard yesterday.
Speaking after a meeting of the financial advisory committee, Finance Minister Charilaos Stavrakis said considerable attention was given to the cash flow problem faced by businesses due to the credit crunch.
“Most representatives of employers and other organisations stressed the problem of securing loans from banks and co-operatives,” Stavrakis said.
One of the main reasons for the limited cash flow on the market is that banks need their excess liquidity to pay for the high interest rates on deposits.
And the Central Bank feels liquidity levels are satisfactory and is unwilling at present to relax the minimum liquidity requirement that would effectively free more cash.
The Federation of Employers and Industrialists (OEV) said interest rates in Cyprus were high. Cypriot banks are now charging the second highest interest rates in the euro zone.
The Chamber of Commerce and Industry (KEVE) said measures must be taken immediately regarding the tourism and construction sectors.
Measures must be announced “today, not tomorrow, to pre-empt negative consequences,” said Manthos Mavromatis, chairman of KEVE.
Mavromatis said the state must put forward the large projects in the tourism sector such as marinas, and golf courses that will be undertaken by private enterprise.
“All procedures must finish so that these important development projects get underway,” he said.
Construction of these projects will mean growth and employment and would not burden state coffers since they will be undertaken by the private sector, Mavromatis said.
He also questioned why the government had chosen to meet with the private sector only two hours before the state was due to announce its plan to boost the tourism and construction sectors.
Trade unions also took part in the meeting.
Left-wing PEO suggested that a possible recession can only be tackled by a development policy led by the state.
“It seems of late that we only remember the public sector when there is a crisis,” said Pambis Kyritsis, PEO secretary general. “Neo-liberal recipes are not working at this moment.”
Kyritsis appeared unhappy with the policy followed by the Central Bank so far.
He said at a time when the government has vowed to follow an intensive development policy, the Central Bank is going the opposite way, “and this is worrying.”
Conservative SEK focused on employment issues.
The head of the union said it was important to prevent possible problems in the employment of Cypriot workers. The government should take measures to protect Cypriot workers since this will contribute to the support of the real economy.
