Cyprus was warned about its “excessive economic imbalances” and was told that financial assistance was “unavoidable” months before it requested aid, Olli Rehn, the vice president of the European Commission, told an economics committee in the European parliament on Wednesday.
Speaking at an extraordinary meeting of the European Committee on Economic and Monetary Affairs in Brussels, Rehn said Cyprus’ problems had built up over “many years.”
“We need to ask why Cyprus found itself in such a grave financial situation that it had to request aid,” Rehn told the committee. “The Commission warned Cyprus about its accumulating problems to tackle the banking, fiscal and monetary problems in 2011.”
“In November 2011, [the European Commission] said a financial assistance program would be unavoidable but even so they [Cyprus] only asked for assistance in June 2012. It is unfortunate that it took Cyprus over half a year to accept the gravity of its financial situation…and its excessive economic imbalances,” Rehn said.
“By March the economic situation had deteriorated so badly that our preference for gradual economic sustenance was not possible anymore.”