Monday

15th Apr 2024

Cypriot finance minister resigns as crisis inquest begins

  • Michalis Sarris was Laiki bank chairman before his second stint as finance minister (Photo: consilium.europa.eu)

Cypriot finance minister Michalis Sarris has quit after concluding the country's €10 billion bailout package with the EU and IMF.

Sarris, who was swiftly replaced on Tuesday (2 April) by Labour minister Haris Georgiadis, had been chairman of the Cyprus Popular Bank (Laiki), which will be wound down as part of the bailout deal.

Read and decide

Join EUobserver today

Get the EU news that really matters

Instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

Depositors with Laiki, the country's second-largest lender, are set to be among the biggest losers from the bailout terms, facing haircuts of up to 60 percent on savings over €100,000.

Sarris' spent a mere six weeks in his second stint as finance minister under the recently elected centre-right President Nicos Anastasiades. In his first period in office between 2005 and 2008, he had been the finance minister responsible for piloting Cyprus' application to join the eurozone in 2008.

The Cypriot government has also announced an investigation into the country's economic collapse, with reports suggesting that Sarris' role in Laiki's collapse had triggered his resignation.

In a statement, Sarris said that the impending investigation had played a part in his departure.

“I believe that in order to facilitate the work of (investigators) the right thing would be to place my resignation at the disposal of the president of the republic, which I did,” Sarris said.

President Anastasiades confirmed that he had received Sarris' resignation "with regret", adding that "I want to thank him."

Under the deal brokered by Sarris and President Anastasiades, Cyprus will have five years - one year longer than expected - to balance its books. The €10 billion loan, which is accompanied by a €7 billion contribution by Cyprus, carries a 2.5 percent interest rate, far lower than that offered to other eurozone countries in previous rescue packages. In return, Cyprus will be expected to slash the number of public sector employees and cut wages and pensions, alongside a programme of privatisation.

The European Commission expects the Cypriot economy to contract by 3.5 per cent in 2013. Earlier on Tuesday, EU statistics agency Eurostat revealed that unemployment in Cyprus hit 14 percent in February, two percent higher than the eurozone average.

There are also concerns that the imposition of temporary capital controls last week could lead to a severe deepening of the country's recession. Speaking with reporters following the conclusion of the bailout agreement, Sarris was unable to confirm how long the controls would remain in place.

Analysts fear that the restrictions, which include a €300 limit on daily cash withdrawals and strict controls of currency flows in and out of Cyprus, could follow the precedent set by Iceland.

In 2008, the Icelandic government imposed controls on all payments going in and out of the country following the collapse of their banking sector. Five years on, the restrictions are still in place.

Resist backlash on deforestation law, green groups tell EU

European environmental groups have urged the EU Commission to stand firm on implementing the bloc's landmark anti-deforestation legislation — despite a backlash from governments in South America, Africa and some EU ministers.

Opinion

This 'deregulation' lobbying now threatens EU economy

Next week's EU summit (17-18 April) will discuss the strategic agenda for the next five years. The current "competitiveness agenda" is to a large extent driven by a big lobbying campaign — so far, not well covered by the media.

Latest News

  1. EU puts Sudan war and famine-risk back in spotlight
  2. EU to blacklist Israeli settlers, after new sanctions on Hamas
  3. Private fears of fairtrade activist for EU election campaign
  4. Brussels venue ditches far-right conference after public pressure
  5. How German police pulled the plug on a Gaza conference
  6. EU special summit, MEPs prep work, social agenda This WEEK
  7. EU leaders condemn Iran, urge Israeli restraint
  8. UK-EU deal on Gibraltar only 'weeks away'

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Join EUobserver

EU news that matters

Join us