Brussels/Nicosia (dpa) - The International Monetary Fund said
Wednesday it would contribute about 1 billion euros ($1.34 billion) to the bailout for Cyprus.
The decision came a day after Cyprus' international lenders - the
European Commission, European Central Bank and IMF - agreed to the
terms of a 10-billion-euro ($12.8 billion) bailout for the
Mediterranean country.
IMF chief Christine Lagarde said the executive board would likely
be asked to approve the deal in May.
"The Cypriot authorities have put forward an ambitious, multi-year
reform programme to address the economic challenges they face," she
said.
In Nicosia, Harris Georgiadis, 40, from the ruling Democratic
Rally party was sworn in as the new finance minister - the second of
the six-week old administration.
"I have a great responsibility and I will do the best for the
country," Georgiades said after the ceremony.
He succeeds Michaelis Sarris, who resigned Tuesday to facilitate
the work of a judicial investigation into the financial crisis. Some
reports linked his decision to his previous tenure as chairman of the
troubled Laiki Bank.
Cyprus expects to receive its first bailout tranche in May, and
will carry an interest rate of 2.5 per cent and a 10-year grace
period.
The government has agreed to austerity measures, including raising
the corporate tax rate from 10 to 12.5 per cent, firing 4,500 civil
servants by 2018 and imposing a temporary insurance fee of 1.5 per
cent on monthly salaries in return for healthcare.
The deal foresees Cyprus running a primary deficit until 2016 and
a primary surplus of 4 per cent of gross domestic product from 2017.
The IMF said the reforms were aimed at stabilizing the financial
system, achieving fiscal sustainability, and economic recovery to
preserve the welfare of the population.
"This is a challenging programme that will require great efforts
from the Cypriot population. 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 said.
Lagarde and EU Economy Commissioner Olli Rehn noted that
"significant challenges lie ahead for Cyprus".
In reaction to the austerity measures, Cyprus' bank workers called
a two-hour work stoppage for Thursday, saying pension schemes at the
island's two largest banks were not protected and suffered huge
losses under the bailout deal.
Unions said the pension funds of workers in both Laiki and the
Bank of Cyprus were at risk, as were the pension funds of other
institutions deposited in those banks.
Under the bailout, Nicosia was forced to split Laiki bank into a
"good" and "bad" bank and impose losses of up to 60 per cent on
uninsured depositors at the Bank of Cyprus.
On Tuesday, the government partially eased currency controls put
in place to avoid a run on deposits. Georgiades said restrictions
would be lifted gradually.
The Finance Ministry said a limit on transactions that do not
require Central Bank approval will be raised to 25,000 euros from
5,000 euros.
Other restrictions introduced last week as banks opened for the
first time after an almost two-week closure will remain in place.
Those include a 300-euro per day cash withdrawal limit and a
1,000-euro limit on cash for travelers.
