Greek Cypriot gov’t banned from business class, their wages axed

NICOSIA - Reuters / Agence France Presse

Newly-appointed Cyprus Finance Minister Harris Georgiades (R) shakes hands with Cypriot President Nicos Anastasiades at a swearing-in ceremony at the Presidential Palace in Nicosia, Cyprus April 3, 2013. REUTERS Photo

Only Greek Cypriot President Nicos Anastasiades and parliamentary speaker Yiannakis Omirou of all government officials will now be entitled to fly business class, as part of the austerity Greek Cyprus agreed to with international lenders in exchange for a bailout while IMF has declared one-billion support to country.

The ban on business class travel for government employees will not apply to transatlantic flights, said a memorandum of understanding between Cyprus and the euro zone, under which the Mediterranean island is to get 10 billion euros in loans.

Apart from the restrictions on more comfortable travel, senior government officials will also lose the right to buy duty-free cars and all state officials and parliamentarians will have wages frozen until 2016, the document said.

Anastasiades warned of “difficult days ahead” as he swore in a new finance minister for an island struggling to recover from a near financial meltdown and the need for a crippling eurozone bailout.

Anastasiades said this would entail “firstly, collectivity and, secondly, consistency and fiscal discipline and all those measures that will contribute to kick-starting the economy as soon as possible.” “I have no doubt that you will not only accomplish your task to the full, but in the best way possible that is worthy of your predecessor,” Anastasiades told the new minister, Haris Georgiades, at the swearing-in ceremony.

On Wednesday, International Monetary Fund managing director Christine Lagarde said the IMF’s contribution to the package would be approximately one billion euros.

“This is a challenging programme that will require great efforts from the Greek Cypriott population,” Lagarde said in a statement, but it “provides a durable and fully financed solution to the underlying problems facing Greek Cyprus and provides a sustainable path toward a recovery.” She added that the measures adopted “seek to distribute the burden of the adjustment fairly among the various segments of the population and to protect the most vulnerable groups.” Under the final deal, Greek Cyprus won a two-year extension, from 2016 to 2018, to get its public finances in order. This will entail a raft of measures, including raising corporate income tax from 10 percent to 12.5 percent, downsizing the public sector workforce and privatising some state-owned firms.

Greek Cyprus is already in recession, with unemployment at around 15 percent and is expected to grow sharply this year and next.