EU, ECB and IMF might have rejected Cyprus plan to create solidarity fund

22.03.2013 18:05
EU, ECB and IMF might have rejected Cyprus plan to create solidarity fund

YEREVAN, March 22. / ARKA /. German Chancellor Angela Merkel told German lawmakers today morning that Cyprus's proposition to nationalize pension funds in order to prop up its finances was unacceptable, RBC reported. She insisted that Cyprus should rather concentrate on debt sustainability and bank restructuring in order to secure a bailout.

Meanwhile, it is possible that the Troika (EU, ECB and IMF) has already rejected Cyprus's proposition to create an investment solidarity fund, as a way to raise funds required to finalize the bailout negotiations. The EU, ECB and IMF are said to have objections as far as the nationalization of state pension funds is concerned as well as the use of revenues from the country's natural gas reserves as collateral.

The establishment of a solidarity fund comes in the wake of parliament’s rejection of a controversial tax levy on banking deposits agreed by the government and the Eurogroup last Saturday. The fund would bundle state assets, including real estate, as well as future gas and oil revenues, as the basis for an emergency bond issue. It was agreed during a meeting between President Nicos Anastasiades and party leaders yesterday morning to discuss a ‘plan B’ that would save the economy from collapse. Reports said that pensions of semi-state enterprises would be nationalized, raising anywhere from €1 to €2 billion.

The purpose of the fund is to “finance and/or bolster financial credit institutions, to promote and/or contribute to the capitalization of credit institutions and/or promote and/or contribute to the financing of the Republic.”. Cyprus has three more days to enact measures aimed at consolidating its banking sector and raising some €5.8 billion on its own, a condition for getting a €10 billion bailout from the EU. -0-


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