Roundup: Cypriot opposition parties threaten to block gov't privatization plans

Cypriot opposition parties have threatened to vote down legislation leading to the privatization of the island's state-owned Telecommunications Authority (CYTA), thus blocking a 275 million euros (303.27 million U.S. dollars) loan from the Eurogroup, parliamentary sources said Monday.

Approval of the bill has been made a prerequisite by the Eurogroup before approving the final tranche of a 10-billion-euro bailout program Cyprus entered in March 2013.

Cyprus' bailout program with the Eurogroup will end on March 31, while its bailout program with the International Monetary Fund will finish on May 15.

Parliamentary sources said Finance Minister Harris Georgiades pleaded with the parties to approve the legislation, saying it had to be done before March 7 at the latest, as the Eurogroup will hold its last session before Cyprus' three-year adjustment program expires.

"If this bill is not approved, an opportunity for both the economy and CYTA itself will have been missed," Georgiades told parliament's economic committee examining the government legislation.

He said that Cyprus would waste the opportunity to obtain cheap money which it will have to borrow from international markets at much higher rates.

Georgiades, who is considered the architect of Cyprus's return to growth for the first time after four years in recession, planned a smooth exit from the three-year austerity program, during which the economy performed much better than international lenders had expected.

He repeatedly warned that failing to achieve this would mean more expensive lending from international markets.

The leader of the ruling party said that an eventual disruption of the privatization program would mean an additional 12 million euros in interest payments every year.

But opposition parties turned a deaf ear to his warnings and Georgiades' pleas.

Centrist party DIKO, which holds the balance in parliament between the ruling center-right party DISY and left wing party AKEL, said it would vote against the legislation.

DIKO, though sharing views similar to those of the government on the economy, is fiercely opposed to the privatization of CYTA for reasons which go back 12 years, when the father of the present party leader, Tassos Papadopoulos, was the president of Cyprus. Papadopoulos had always been an opponent of privatizing state-owned enterprises and his policies are being following by the party without any deviation.

AKEL, the former communist party of Cyprus, favors a central role for the state in providing public utilities, such as communications and electricity.

An eventual voting down of the government's legislation will not derail Cyprus' exit from its 3-year economic adjustment program.

But Georgiades warned that rating agencies would consider the blocking of the government's privatization plans as a negative development, which could scare away much-needed foreign investment. Endit