Orphanides demands more austerity measures

New tough measures with tax increase: The need for new fiscal consolidation measures was supported by the Governor of the Central Bank of Cyprus, Athanasios Orphanides, immediately after the double downgrading of Cyprus by the credit rating agency Moody's… The firm downgraded the long-term debt of Cyprus to Baa3, with a negative outlook. private creditors and the institutional inability of the state to take the necessary measures.

"Other consolidation measures are needed," Mr Orphanides said. "Existing measures could be further strengthened to further reduce government spending," he said.

Speaking at a conference on economics at the University of Cyprus, Mr Orphanides said the measures may include tax increases. "The possibility of tax increases cannot be ruled out," he said.

The point, he said, is to convince the world that we are credible.

The conference did not fail to reflect on the sharp increase in capital requirements for European and Cypriot banks provided for in the Summit agreement. According to the agreement, the banks will have to create a reserve of major basic capital of 9% by June 2012. The two major Cypriot banks are estimated to need around 3,6 billion euros. Source: Newsbeast