Reforms in Cyprus
The Cyprus Government have once again made an appeal to Parliament to consider and adopt the draft legislation on the Civil Servants of Cyprus, aimed at raising the sovereign rating of Cyprus and reducing the cost of borrowing on the international market. In August 2016, the cost of borrowing for Cypriot debt securities is 3.7% per annum, which is high considering Italy for example is under 1.13%.
Cyprus is a small island with a relatively small population. Given the size and the fact that during the communist ruling in Cyprus, Civil Servants wages were excessively raised; the civil service is still a coveted career for many Cypriots. On the other hand, Troika (which includes the IMF, the ECB and the European Commission) calls for reform in this area, as everyone fears that the absence of reforms will sooner or later lead to the next budget crisis, when the government simply does not have funds to pay civil servants such high salaries.
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