Cyprus government rules out eurozone exit notion

Cypriot Finance Minister Haris Georgiades has brushed off any idea that his cash-strapped island nation would abandon the European single currency, euro.

Georgiades told parliament’s finance committee on Monday that leaving the eurozone would take Cyprus back “centuries”, and insisted that Nicosia has no plan to renege on a 10-billion-euro ($13 billion) international bailout.

“It’s time to correct past mistakes. It’s time to pay the bill. We can only spend what is in our pocket. There is no other option,” he stated.

Georgiades stated that Cyprus will not abandon the euro as its currency, and the subject is “not up for discussion.”

“It’s a question of reality. Government instructions to the ministries will be to compile next year’s budget essentially from scratch. Each item, each program of the ministries must be explained and justified,” he said.

Under a deal agreed in Brussels on March 25, Cyprus must raise 5.8 billion euros ($7.4 billion) to qualify for the full loan from the European Union, European Central Bank and International Monetary Fund to avert bankruptcy.

This means that that bondholders, investors and savers with more than 100,000 euros in the country’s two largest and crisis-ridden banks — the Bank of Cyprus and Laiki Bank — would stand to lose up to 60 percent of their savings.

In addition, Cyprus will have to considerably trim down its swollen banking sector, raise taxes, scale back the public sector workforce and privatize some state-run companies.