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NICOSIA (Reuters) - The frontrunner in Cypriot presidential elections promised on Thursday to back terms of a bailout deal with international lenders, but said privatisations would not be a priority for his administration.
Cyprus is seeking financial aid which could potentially reach 17 billion euros, equivalent to the annual output of its economy, after its banks booked massive exposure to Greece, and fiscal slippage shut it out of international capital markets.
"I fully acknowledge the need for the new government to implement the terms of the Memorandum of Understanding, fully and effectively.. (and) the importance of meeting all targets and objectives," Nicos Anastasiades told Reuters in an interview.
Anastasiades, president of the right-wing Democratic Rally party since 1997, is clear leader in opinion polls before presidential elections on the Mediterranean island on February 17.
If elected, he said, he would introduce reforms to foster sustainable development and growth, including new business incentives and civil service restructuring.
"We have been temporarily derailed by bad policies, but Cyprus continues to have excellent prospects," he said, referring to the outgoing government as being influenced by "outdated left-wing dogmas".
Anastasiades said he would be pressing that point at an extraordinary meeting of the European People's Party, a grouping of European centre-right parties, in Cyprus on Friday.
German Chancellor Angela Merkel, whose party has expressed unease on bailing out Cyprus, will be present.
Merkel said on Wednesday she expected talks on a bailout to take time, warning there would be no special conditions for Cyprus and that it would be expected to pursue deep reforms including privatisations in return for aid.
Cyprus's bailout talks are complicated by concerns over assuming a massive debt mountain it could ill afford to pay back.
In a preliminary bailout deal reached in talks with the so-called troika of the International Monetary Fund, European Commission and European Central Bank, Cyprus has pledged to make savings of some 1.2 billion euros over a four-year period.
The draft deal specifies this should be achieved by cutting public sector salaries, trimming the benefits system, pension reform, tax increases and, if necessary to ensure debt sustainability, selling off of state-owned enterprises.
The outgoing government has ruled out state sell-offs.
"Privatisations are not a priority in my electoral manifesto," said Anastasiades, noting however the asset sale provision in the draft deal to ensure debt remained at sustainable levels.
"For reasons not relating solely to privatisations, I hope our debt levels will remain within sustainable levels. I am actually holding the outgoing government and the central bank responsible for this," he said.
Anastasiades said he would use Friday's meeting to promote support for Cyprus's bailout bid. "I'll be making the case that, in a way, the assistance we are requesting is nothing but a good investment on behalf of our partners," he said.
"Harsh and unnecessary conditions that will demolish Cyprus as an international business centre should be avoided."
Reporting By Michele Kambas; editing by Stephen Nisbet