Friday, March 22, 2013

Cypriots rush to draw up new plan as Moscow talks fail

NICOSIA, March 22, 2013 DPA

Lawmakers in Cyprus were to vote on Friday on a series of measures designed to obtain an international bailout, as talks on securing help from Moscow ended in failure.

The government is racing to put together a new bailout package to appease both parliament and the country's potential creditors by Monday, the deadline set by the European Central Bank to stop emergency funding to Cypriot banks and allow them to collapse.

Nicosia needs to raise € 5.8 billion (7.5 billion dollars) to qualify for a €10-billion rescue loan from the European Union, the European Central Bank and the International Monetary Fund. It already rejected the option of raiding up to 10 per cent of people's savings in a parliamentary earlier this week.

As lawmakers were holding talks in Nicosia, Russia declared that negotiations on new financial help for Cyprus had ended.

Moscow had no interest in the proposals offered by visiting Cypriot Finance Minister Michalis Sarris, Russian Finance Minister Anton Siluanov was quoted by the Interfax news agency as saying.

Nicosia had been hoping for help from Russia, because almost a third of the estimated €70 billion in deposits in Cyprus are believed to be held by Russian citizens.

The bills being debated on Friday included restructuring the country's banking sector, setting up an investment solidarity fund and restricting bank transactions to prevent a run when the banks reopen.

The solidarity fund would include revenue from the country's newfound off-shore gas reserves, pension funds, and bonds and securities.

On Thursday, political leaders decided to restructure the country's second-largest bank, Laiki, or Popular Bank, to raise an estimated € 2 billion out of the total 5.8 billion Cyprus needs.

The bank would be split into a "good" bank, which would take over the healthy investments, while the "bad" bank would keep the unhealthy investments.
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