Cyprus May Face Reform Hurdles After Diko Party Quits Government

The decision by Cyprus’s Democratic Party, known as Diko, to withdraw from the coalition government of President Nicos Anastasiades could make it harder to pass laws required to ensure the flow of international loan funds, Diko lawmaker Angelos Votsis said.

“We are now in the opposition and things are going to get more difficult,” Votsis said in a phone interview today. “All options in today’s vote on the government’s asset-sale plan are open for Diko and our decision will be shaped according to what amendments are approved.”

Diko pulled its support for Anastasiades earlier today after disagreeing with the wording of a framework for talks on reunification of the divided island. Party President Nicholas Papadopoulos asked today for the four ministers from his party to resign. The move may affect the government’s ability to proceed with economic reforms required under the country’s loan deal with international creditors.

Without Diko’s eight lawmakers, the government’s contingent falls to 21 in the 56-seat parliament. Lawmakers are set to vote later today on an asset-sale plan. Cyprus must approve legislation on the privatization program by the end of February to qualify for the next tranche of its 10 billion-euro ($13.7 billion) loan from European partners and the International Monetary Fund, Finance Minister Haris Georgiades said Feb. 11.

While Diko may have concerns over the privatization plan, the party supports the loan program, Professor Theodoros Panayiotou, director of the Cyprus Institute of Management, said today by phone. “For Diko, it’s Cyprus’s only way to exit the economic crisis so there should be no problem for the overall program.”

To contact the reporter on this story: Georgios Georgiou in Athens at ggeorgiou5@bloomberg.net

To contact the editor responsible for this story: Stephen Foxwell at sfoxwell@bloomberg.net

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