ECONOMY

S&P: Cyprus rating unaffected by polls

Standard & Poor’s Ratings Services said yesterday that the results of the first round of the presidential election on Cyprus this weekend have no immediate effect on the sovereign ratings of the Republic of Cyprus (A/Positive/A-1). The defeat of Cyprus’s President Tassos Papadopoulos in the first round of voting does, however, have a consequence for the reconciliation talks between the Greek- and Turkish-Cypriot communities, which is positive for longer-term development on the island, the rating agency said. Unlike Papadopoulos, who led the rejection of the Annan Plan in 2004, both Dimitris Christofias, leader of the Communist Party (AKEL) and Ioannis Kassoulides, running as an independent but backed by the DISY party, have campaigned on the platform of resuming talks with representatives of the Turkish-occupied part of the island as soon as possible. This, however, far from guarantees that any agreement will be reached, according to S&P. «Regardless of which candidate wins the elections, significant work will still have to be done before any concrete resolutions are reached, especially on issues such as property ownership and Turkish settlers.» «In the medium to long term, if an agreement is reached, integration costs, although expected to be significant given the infrastructure needs and the lower prosperity in the Turkish-occupied part of the island, should not strain the Cypriot fiscal performance to a great extent as EU funds are likely to play a significant role in this process. Positive consequences are likely to include lower defense spending and further emphasis in political discussion on the structural challenges faced by Cyprus.»