DISY ‘spinning’ Moody’s report

THE government yesterday accused main opposition party DISY of twisting a report by Moody’s rating agency to make gains in the upcoming parliamentary election.

On Thursday, Moody’s put the Cyprus economy on notice of review for a possible downgrade, saying the 2011 budget had failed to address structural issues that could undermine the government’s fiscal strength in the medium to long term.

The ratings agency put the island’s Aa3 government bond ratings on review, also citing the island’s deteriorating fiscal standing and banks’ high exposure to Greece.

Government spokesman Stefanos Stefanou said yesterday that Moody’s did not dispute whether Cyprus could satisfy its fiscal obligations towards the EU, but referred to structural rigidities of the economy on chronic problems and especially the cost of the public service.

“Apparently the Democratic Rally [DISY] thinks they will make gains in the elections by twisting the facts and scaremongering,” Stefanou said. “What is certain is that the economy does not benefit from this tactic.”

The spokesman said it was “not wise to shoot ourselves on the foot” at such a difficult time for the global economy.

Stefanou said the government “dared deal with the economy’s chronic structural problems”, which other administrations either swept under the carpet or made worse.

He said the government had cut the number of civil servants by 1,000 in 2010 and has scrapped the unemployment benefits government workers received for six months after retirement.

“Some give the impression that problems amassed through the decades can be resolved from one day to the next as if the government holds a magic wand,” Stefanou said. “Often, those on the front line of criticism also bear heavy responsibility for the creation of these problems.”