The Cypriot government plans to sell part of its gold reserves within the next months, Finance Minister Haris Georgiades said

April 17, 2013 Leave a comment

Cyprus Central Bank Must Approve Gold Sale, Finance Chief Says

The Cypriot government plans to sell part of its gold reserves within the next months, a decision that needs to be approved by the country’s central bank, Finance Minister Haris Georgiadessaid.

“The exact details of it will be formulated in due course primarily by the board of the central bank,” Georgiades, 41, told Bloomberg TV’s Ryan Chilcote in an interview in Nicosia. “Obviously it’s a big decision.”

Cypriot President Nicos Anastasiades is trying to unlock 10 billion euros ($13.2 billion) of loans from the euro area and the International Monetary Fund. To do so, he must come up with a further 11 billion euros through measures including a tax on bank deposits of more than 100,000 euros at the country’s two biggest banks and the sale of assets and gold.

An April 9 debt assessment by the European Commission said Cyprus had committed to selling about 400 million euros of “excess” gold reserves, prompting gold futures to fall the most in five months. In response to the disclosure, the Central Bank of Cyprus said it wasn’t considering a sale.Central bank chief Panicos Demetriades said last week that the Cypriot government didn’t have the right to sell gold without his consent. He also signalled the administration hadn’t involved him in the plan.

The Cypriot central bank manages the country’s gold stock, which amounts to 13.9 metric tons, according to the World Gold Council.

Independence

Georgiades said the government fully respects the independence of the central bank and insisted on effective cooperation. The country needs to look into how it got into this difficult situation and “obviously some decisions of the central bank will be examined” by an independent commission, he said.

Gold futures fell to the lowest since January 2011 on April 16 on increased investor concern that European governments may have to follow Cyprus in selling reserves, Goldman Sachs Group Inc. said in a report yesterday.

“I’m not really sure if the series of events is exactly matching with the recent movements in the price of gold, but I suspect maybe it was a contributing factor,” Georgiades said.

To contact the reporters on this story: Natalie Weeks in Athens at nweeks2@bloomberg.net; Tom Stoukas in Athens at astoukas@bloomberg.net.

Filed under Macro Trends

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