ECONOMY

Ruling party in Cyprus rejects troika’s bailout demands

Cyprus?s ruling communist party, AKEL, rejected key demands in a proposal from international lenders, while pushing for steps that foster growth and for bailout talks to proceed, party chief Andros Kyprianou said on Monday.

AKEL, the party of Cypriot President Dimitris Christofias, cannot accept a proposal by the so-called troika that oversees euro-area bailouts to end the indexation of public sector wages and suspend the practice in the private sector for the duration of the rescue program, Kyprianou said in an interview in the capital Nicosia.

The party also dismissed the troika?s call for a privatization timetable.

?The package, the building blocks submitted by the troika lack proposals aimed at boosting growth,? Kyprianou said.

?In all the other countries where the troika?s proposals were implemented, not only have their economies failed to recover, but their recessions have been deepened.?

Officials of the troika, drawn from the European Commission, the European Central Bank and the International Monetary Fund, are unlikely to return to Cyprus to restart bailout talks until at least mid-October, a Cypriot official said last month.

Kyprianou, who succeeded Christofias at the helm of AKEL in 2009, said talks with the troika must begin ?without delay? and proceed ?as quickly as possible so that we can conclude before Cyprus needs additional funds.?

The Cabinet met yesterday to discuss its counterproposal to the troika on bailout terms and will continue its deliberations tomorrow, government spokesman Stefanos Stefanou told reporters.

Steps under discussion include trimming the public payroll, increasing the property tax, value-added tax and excise taxes on tobacco and alcohol in a bid to get close to the troika?s target of 975 million euros of savings through 2016, said a person familiar with the talks who declined to be identified because the deliberations are private.

Ending wage indexation is not on the table, the person said.

[Bloomberg]