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 Georgiades said.
“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, the sale of assets and gold and other tax measures.
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.
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.
“There is an issue and it’s actually a major issue,” Georgiades said. The government will do whatever is needed to ensure “smooth and effective cooperation between all decision-making authorities,” he said.
Anastasiades set up a commission this month to investigate the reasons that led Cyprus to the brink of a financial collapse.
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. The price of gold advanced 0.7 percent to $1,377.21 at 8:01 a.m. in London, gaining for a second day.