S&P observations contain positive assessments

The observations of Standard and Poor's regarding the economy of Cyprus, despite the downgrading of the economy, contain positive and hopeful assessments, Deputy Government Spokesman Christos Christophides said on Wednesday.

He pointed out that now was the time for a new package of measures, which would decisively contribute towards fiscal consolidation and strengthening the prospects of economic growth.

''The negative development with the downgrading of the credit rating of the Republic of Cyprus by Standard and Poor's is based on the assessment regarding the large size of the banking sector in Cyprus, in comparison with the size of the Cypriot economy, and the activities of Cypriot banks in Greece,'' he said.

He added that ''the observations of Standard and Poor's contain positive and hopeful assessments for the Cypriot economy.''

''First of all, the evaluation of the Government for a public deficit of 6% for 2010 is confirmed. It also says that the 2011 budget is a positive step in efforts for fiscal consolidation,'' he noted.

Christophides also said that ''the assessment of Standard and Poor's deems the aim to restrain the fiscal deficit at 4.5% next year feasible, with some mild measures.''

He pointed out that ''we must take socially-fair measures'' and that ''now is the time for a new package of measures'' which, with ''a very small social cost, especially compared to what is happening in other countries in Europe, will contribute decisively to fiscal consolidation and the strengthening of the economy's prospects for growth.''

Standard and Poor's downgraded Cyprus' credit rating from A+ to A on Tuesday, Minister of Finance Charilaos Stavrakis announced, adding that although the decision was negative, the government had covered its borrowing needs from abroad for the next few months and thus the downgrading would not have a direct impact on the taxpayer.