Rehn: Cyprus must step up austerity measures

14:37 THE EU’s economic affairs commissioner Olli Rehn has once again called on Cyprus and other member states to step up its austerity measures in order to regain market confidence.

In a speech in Berlin today, Rehn said: “The fundamental reason for the turbulence in the sovereign-debt market is that there is no trust in the market…  Some member states (need to) do the necessary fiscal and structural reforms to service their debt”

Referring to the countries that received letters from Rehn last week, calling for increased austerity measures, he said: “Those countries that have come under pressure need to step up their efforts to regain market confidence, and they have committed to do so.”

Failure to step up their efforts and meet shared commitments on debt and deficit ceilings could mean fines for Cyprus.

Last month Rehn highlighted Cyprus and Belgium: “As examples of those which could be at risk (of EU sanctions) if they do not make significant adjustments to their public finances within the next couple of months”

The Cyprus government has said that its 2012 budget is geared towards reducing its fiscal deficit to 2.3 per cent from around 6.0 per cent in 2011.

Also on the EU’s watchlist is Greece, whose national unity government must pursue budget cuts and economic-policy changes to boost growth.

“In particular, Greece must make decisive and rapid progress in its transformation,” Rehn said yesterday.

On Italy, Rehn said he would continue “monitoring closely in the coming weeks and months” the nation’s fiscal consolidation under the government of Prime Minister Mario Monti.

“Overall, the current situation in Italy represents an opportunity for positive change,” Rehn said. “I am confident that with the right policies Italy can overcome the current loss of market confidence.”

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