FINANCE Minister Charilaos Stavrakis yesterday defended the government’s package of measures to support the economy and questioned whether commercial banks were as cash-strapped as they made out.
The minister questioned whether banks were refusing to give out household loans with logical terms due to a lack of liquidity or were simply following old bank policies and reducing their ability to give out loans.
“There are indications our banks have some liquidity as they’ve made some significant investments abroad. Many Cypriot and Greek banks established in Cyprus have made significant investments abroad in recent months,” he said.
Stavrakis said this was clearly up to each individual bank and its strategies but that it benefited the economy.
Stavrakis said a meeting would be held at the presidential palace in the next few days to discuss maintaining the low loan interest rates and examining ways to lighten the terms of loan payments.
The meeting will include bankers, Central Bank and Finance Ministry representatives.
The minister also said the use of credit cards was best avoided as their high interest rates were an additional burden to households.
DISY vice president Lefteris Christoforou said the government’s measures would do nothing to help the average consumer and blamed the government for its repeated procrastination.
He said the brunt of the financial crisis would be suffered by workers, farmers, pensioners and medium-sized businesses thanks to the high prices and high interest rates on loans.
In an effort to help offer some relief to workers, Christoforou suggested reviewing the tax bracket, abolishing road tax and appealing to the European Union to reduce VAT on electricity.
But Stavrakis said Christoforou was being unfair and called for calm. He said there was no reason to panic and that Cyprus’ banking system was healthy and the economy strong. He said the government was open to abolishing road tax if motor fuel was increased. However he said reducing VAT on electricity would only serve to benefit the more affluent members of the public.
Meanwhile the president of the Cyprus Chamber of Commerce and Industry (KEVE) Manthos Mavrommatis said banks’ priority should be loans to businesses as long as they fulfilled the necessary criteria.
Mavrommatis said although Cyprus economy was stable and strong it would likely be burdened next year.
“It’s natural that banks will be much more careful in lending,” he said.
But loans to businesses would bring about development and create wealth, which was why it had to be one of the banks’ priorities.
