Pissarides, who was speaking to the press after a meeting the National Economic Council held with the heads of the Troika delegation currently in Cyprus for the third review of thecountry’s adjustment programme, said that if an investor puts some fresh capital into the Bank of Cyprus, as was done a few months ago in the case of Hellenic Bank, then all problems of the financial sector would be resolved.

Referring to the meeting with the Troika, he said that they mainly discussed the economic growth model. “We believe that in order to create new jobs and reduce unemployment the economy must recover and for this to happen investments are required both domestically and from abroad,” he said.

Pissarides noted that the Council is conducting studies on this issue, which will be ready before the next review by the Troika, adding that the most important thing is to create conditions in order to attract foreign investments, without any fears from investors that they may lose their capital, get trapped into restrictions or problems related with bureaucracy. Furthermore, he said that there are foreign investors who believe that if they bring their money to Cyprus they will get trapped. This is not the case as fresh capital from abroad is not subject to restrictions, he went on to say, reiterating that it is pivotal to create conditions that will attract investors.

Asked about the banking sector, Pissarides said that a lot has been done so far and that the most important thing is to allow free movement of capital, something that has already started domestically, and to create conditions that will attract a major investor, mainly for the Bank of Cyprus. The Nobel prize laureate also stressed the need for Cyprus to return to the international markets, noting that this will result in economic recovery and unemployment reduction. Excluded from the international markets, Cyprus applied for financial assistance to cover its fiscal needs and to rescue its two largest banks hit severely by deteriorating assets amid the financial crisis and by the Greek sovereign debt haircut. The Cypriot authorities and the Troika (EC, ECB and the IMF) agreed last March on a €10 billion bailout, featuring a haircut of uninsured deposits. So far Cyprus has received two positive reviews on the implementation of the Memorandum of Understanding, the basis of its international bail-out.

Source: Financial Mirror