Cyprus cuts Easter bonuses, spends cuts and increases taxes to secure rescue
Other measures include raising retirement ages for public and private-sector workers, cuts to health-care spending and raising €1.4 billion from privatizations over the next five years, limiting first-class travel for senior officials, making it easier for banks to seize a person's home, and cutting Easter bonuses to pensioners in exchange for a multibillion-euro bailout from its euro-zone peers and the International Monetary Fund.
Voice of Russia, WSJ
Cash-strapped Cyprus will fully implement the terms of a 10-billion-euro EU-IMF bailout, new Finance Minister Haris Georgiades said on Wednesday.
"First of all we shall implement the MoU (memorandum of understanding) fully without any derogation; we shall meet all timeframes and meet all targets," he said as he took up his new post.
The International Monetary Fund has agreed to provide approximately one billion euros to the 10-billion-euro rescue plan for cash-strapped Cyprus, said managing director Christine Lagarde.
This would be through a three-year 891 million Special Drawing Rights (about one billion euro) loan," Lagarde said in a statement, adding that she expects the deal to go to the IMF executive board for approval in early May.
The International Monetary Fund rescue program for Cyprus aims to stabilize the nation’s banks and reduce public spending, IMF Managing Director Christine Lagarde said.
“This is a challenging program that will require great efforts from the Cypriot population,” Lagarde said in a statement. “We believe that it provides a durable and fully financed solution to the underlying problems facing Cyprus and provides a sustainable path toward a recovery.”
Lagarde and European Union Economic and Monetary Affairs Commissioner Olli Rehn said they “stand by” Cyprus, according to a joint statement accompanying the IMF announcement. That statement said Cyprus has agreed to a “well-paced fiscal adjustment” that balances short-term and long-term needs.
The decision was made after the Cypriot government and the “troika” of international lenders (European Commission, European Central Bank and International Monetary Fund) agreed on a bailout memorandum with the first tranche expected to come in May.
Under the deal, the “troika” will perform quarterly checks of Cyprus’s budget revenue and spending.
Cyprus’s President Nicos Anastasiades believes that the financial crisis in his country is taking place because of certain mistakes of several high-ranking officials, and he has ordered to investigate this case.
A special commission for this investigation has been formed on the President’s order.
Mr. Anastasides has also ordered to investigate his own actions and those of his family, because some people are saying that they allegedly knew about the coming crisis before its start and transferred large sums abroad. The President is denying all these accusations.
Cypriot Finance Minister Michalis Sarris resigned on Tuesday and is to be replaced by Labor Minister Haris Georgiades, the Phileleftheros newspaper's website reported.
Cyprus concludes bailout talks, aid to flow in May
Cyprus has concluded talks with its international creditors on the terms of its 10-billion euro ($12.85 billion) bailout and will get its first installment of aid in May, the government said on Tuesday.
"We have concluded on a memorandum. This is a significant development," said government spokesman Christos Stylianides.
Under the terms of the deal, Cyprus will have until 2018 to carry out measures to shore up its finances.
The island's Finance Minister Michael Sarris said financing from lenders would begin in May.
The problem of Cyprus, whose government has resorted to overly tough measures to reorganize its banking system in exchange for EU and IMF bailout, will have no major impact on the Russian economy so long as it doesn’t affect other Eurozone member states, Russian First Deputy Prime Minister Igor Shuvalov said on Tuesday.
The matter is up to the European Union and Cypriots to sort out, but if the Cypriot crisis expands to the rest of the Eurozone, then it may pose a big problem for Russia, Shuvalov said.
Voice of Russia, Reuters, AFP, BBC, RIA, Bloomberg