$1.3 billion package from IMF for Cyprus as bank restrictions ease

by Loventrice Farrow | Thursday, Apr 4, 2013 | 479 views

Northern, WI 04/04/2013 (usastockreport) – Christine Legarde, the International Monetary Fund managing director said that it would contribute $1.3 billion (around 1 billion euros), towards the Cyprus rescue program. The country is just pulling itself out of a major financial crises and this will help the country in its efforts of stabilizing its banks and reducing the public spending in the country. The staff-level agreement had been initiated and the basic agreement has been worked out on March 25 by the authorities of the euro area. As part of the deal, Cyprus had to shut down its second largest bank, Laiki and restructure its biggest bank as well.

Sustainable solution

Budget deficit reductions and adjustment in salary and pension systems are to be brought into effect. Legarde said that the situation is not going to be an easy one and the citizens of Cyprus will be facing major challenges. They believe that the plan has a very solid base and that the solution is a fully-financed one. In addition to this, it has also provided the country with sustainable support to recover from the crisis. Cyprus has agreed to maintain equilibrium in its short-term as well as in its long-term fiscal adjustments.

New finance minister

Nicos Anastasiades the Cypriot president also swore in the new Finance Minister

Haris Georgiades. The 40-year old University of Reading graduate is a lawmaker with the Disy party and he takes the place of Michael Sarris who resigned from the post a couple of days ago. Sarris will be assisting a probe-committee who will be going into the details of the financial collapse. The banking restrictions in the country are finally being eased-off. Initially when the banks threw open their doors on March 28, there was a 300 euro limit on withdrawals.

Most deposits unaffected

There was a lot of rife amongst account holders in the country’s banks. The deal which has now been finalized will mean that all the depositors who are insured will be fully protected. Incidentally this covers 95 percent of the account-holders. What this also means is that the losses will have to be absorbed by the 5 percent uninsured depositors. There will be temporary limitations on their accounts as well as on capital transfers.

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