“We have not yet looked in to the parameters of the completion of the programme,” which expires in seven months, Georgiades said in a telephone interview on Wednesday. “This will be done towards the end of the year”.

The Finance Minister said he did not expect any direct negative impact from the current stock market turbulence in China and added that he considered a positive impact on government borrowing costs likely, as investors would seek for an alternative safe haven.

The yields of Cyprus’ 7-year bond, which was expires in 2022 and is the most recently issued government security traded on the London Stock Exchange, rose on the secondary market to 3.63% today from 3.60 on Friday, the last trading day before Monday’s blood-letting in China, according to a Bank of Cyprus document. German 10-year government bond yields stood at 0.73 today on the secondary market compared to 0.58 on Friday.

Ioannis Tirkides, senior officer at Bank of Cyprus’ economic research unit, added his voice to those advising the government to err on the side of caution and request a credit line “in order to have its economy shielded from any probable external shocks or factors which could disrupt its recovery process”.

“Let’s not forget that while Portugal and Ireland completed their respective programmes and did not ask for a credit line, their situation and problems were different compared to those of Cyprus, and more importantly the international environment was more benign at the time with less uncertainties,” he said. “Recent developments in China in particular are less reassuring of robust global growth. The crash in commodities points in the direction of a slowing Chinese economy may be at a faster pace than assumed so far”.

China’s economy falling into a recession, which is “no longer unthinkable,” Tirkides said, “will have global implications”.

Source: Cyprus Mail