Cyprus rescue plan will require great efforts, IMF says
Source: BBC
Cyprus has agreed to a set of measures that will release a 10bn-euro (£8.5bn; $12.8bn) international bailout.
The International Monetary Fund (IMF), which is contributing 1bn euros, says they are "challenging" and will require "great efforts" from its population.
They will mean a doubling of taxes on interest income to 30% and a rise in corporation tax from 10% to 12.5%.
The plan, designed to stabilise the banking system and government finances, was agreed in principle last week.
Read more: http://www.bbc.co.uk/news/business-22014500
dipsydoodle
(42,239 posts)This was posted in the Economy Group here a few days ago : Pop Quiz: How Big Is the Bailout Of Cyprus ? http://www.cyprus.com/pop-quiz---how-big-is-the-bailout-of-cyprus
And see this in the same forum too : Survival of the Brokest in Cyprus Bailout http://www.bloomberg.com/news/2013-04-01/survival-of-the-brokest-in-cyprus-bailout.html I knew that the Greeks had bought their end of the Laiki Popular bank but not that they had only bought the good assets and not the liabilities.
It would seem that the apparent bailout of Cyprus is in some respects an additional backdoor bailout for Greece.
There is also the subject of the legality of the taxes being imposed on Cypriot bank a/cs. See http://www.democraticunderground.com/?com=view_post&forum=1002&pid=2604637
That is aside from some being excused the tax - the Greek Orthodox Church for example. Sounds like a case of "gravy for some"
If the tax was found to be illegal, there would at present be no bailout and as such a bankrupt Cyprus.
muriel_volestrangler
(101,368 posts)The measures being taken with Laiki and Bank of Cyprus are different, because they are actually insolvent (before the reconstruction, anyway). Deposits in an solvent bank, above the limit of any guarantee, are normally at risk.
I can't follow the argument in the 'pop quiz' link.
dipsydoodle
(42,239 posts)with regard to the main two - yes deposits would be at risk.
The 'pop quiz' article doesn't help itself by the use of acronyms which assume prior knowledge of their usage. ELA is emergency liquidity assistance, NAV is net asset value and I think NPL's for are non performing loans.