ECONOMY

In Brief

Cyprus to widen range of ECB collateral loans NICOSIA (Reuters) – Cyprus said yesterday it was working on changing the rules so that government-guaranteed bank loans to local authorities could be used as collateral by commercial banks for financing from the European Central Bank. The Cypriot government offers guarantees in rare cases for commercial bank loans taken by local governments and semi-government corporations. By changing its treatment of such contracts and their terms, the contracts could be used by banks to acquire low-interest financing which could be passed on to consumers, Finance Minister Charilaos Stavrakis said. «There are loans to local authorities… which carry a government guarantee. They can be used as collateral to secure additional liquidity at interest rates of about 2 percent from the ECB,» he stated. He said the move would encourage the inflow of an additional 1 billion euros into the Cypriot economy. Turkey takes new step to boost banks’ liquidity ANKARA (Reuters) – Turkey’s central bank said yesterday it was extending the period for which the banks can borrow from each other from one to three months, in a bid to avert a foreign exchange liquidity crunch. The move came a day after the central bank cut interest rates by a larger-than-expected 150 basis points on Thursday to help firms and banks facing a sharp decline in the economy and falling profits. The changes were the latest in a series of moves by the central bank to support liquidity after Turkish markets came under severe pressure due to the global financial crisis and growing risk aversion toward emerging markets. Romania budget The Romanian parliament approved yesterday the government’s 2009 budget, a key tool in its efforts to regain market trust and stop the country from plunging into a financing crisis. Putting in place a near freeze in state salaries and a sharp cut in the fiscal deficit target, the budget also earmarks more than 10 billion euros to lessen the pain of sharp economic slowdown. Prime Minister Emil Boc has called the budget «relatively austere» and the International Monetary Fund has endorsed it, welcoming planned spending cutbacks and a deficit target of 2 percent of gross domestic product. (Reuters) Turk power grids Turkey’s Privatization Administration (OIB) is planning to start the tender process for the privatization of two electricity distribution grids in 15-20 days, OIB Chairman Metin Kilci told NTV broadcaster yesterday. The Turkish privatization process has stalled due to the world financial crisis and absence of interest from investors, but the OIB is carrying on with some plans, including sale of the lottery company Milli Piyango. (Reuters) Serbia-IMF Serbia expects to conclude a 2-billion-euro loan with the International Monetary Fund by April as growth is seen falling far short of earlier official estimates, the prime minister said yesterday. «We are expecting to conclude a new agreement with them by April,» Mirko Cvetkovic told Reuters in an interview. «We are expecting about 2 billion euros from the IMF for the currency reserves, and from the European Union we are seeking about 400 million euros.» (Reuters)