Cyprus’s government will approve additional fiscal-consolidation measures this week in response to recent credit-rating cuts, Finance Minister Kikis Kazamias said, without specifying their value.
“This should occupy the government seriously,” he said today in an interview with state radio CyBC. “We may have no means to solve the negative systemic impact on the Cypriot economy from the banking system, but as far as public finances are concerned, this will have to preoccupy us.”
Moody’s Investors Service lowered the east Mediterranean island’s sovereign-credit rating two levels to Baa3, the lowest investment grade, on Nov. 4. That followed Standard and Poor’s Oct. 27 cut to BBB from BBB+ on expectations Cyprus will be forced to support its ailing banks.
Moody’s decision was “excessively strict and unjustified” even as the evaluation was “objective,” Kazamias said. The Cypriot financial system was hit worse than that of any other country, relative to its size, after the Oct. 26 bailout package to slash by half the value of Greek debt held by banks, he said.
“In general, the situation in the euro area is very difficult,” Kazamias said. “While countries with an AAA rating are concerned, it would be irresponsible for anyone else, including Cyprus, not to be concerned about the state of our economy.”
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