It was the day the country robbed its’ people of their own money and will go down in history just as much as the Cyprus Explosion on 11 July 2011.
Okay, nobody died this time (although it was indicated that may well have been the fate of the Cyprus Popular Bank / Laiki Bank and its’ 8,000 staff) had all of the residents who own a bank account not paid for it to stay afloat.
Let me tell you that Cyprus’ residents had absolutely no say in this matter whatsoever. It was a decision taken between the Government of Cyprus and the Troika over our much anticipated “bailout” which was supposed to save Cyprus from falling off the edge of the world.
The decision was taken late on a Friday evening and announced on Saturday morning that each account balance would be debited with either 6.75% or 9.9% (for those with more than €100,000 in an account).
Banks which usually open on Saturday morning had to close when the news broke and people started to go and empty their accounts. What else could they have expected, I wonder?
On top of all that, this weekend has been eagerly anticipated as it’s the start of Lent so the streets today should be filled with happy, smiling people to celebrate the huge carnival processions in all the main towns and cities. Instead, I think although they may be there in body, their spirits and thoughts will be elsewhere and those spirits will not be smiling…. The people are furious!
Some of these people have had money in banks where they have been saving for their children to go on to college and universities abroad after they leave school. Instead, those savings accounts had a “haircut” yesterday morning – so now they will have to do some more saving….
But where will they be saving their money? I doubt very much that anyone will be running to put their funds in a bank deposit account again in Cyprus for a very long time.
The people no longer trust the banks nor the Government….
Did I tell you it’s also a public holiday here on Monday? It’s Green Monday, the day when the Greek Orthodox religion all head off to the grassy areas with their families to celebrate the start of Lent, to eat a picnic and fly kites with their kids. So, not only did they rob us all while we slept in our beds on Friday evening, they were also blocking money out of our accounts over a long weekend when nobody can access their funds! (The link highlighted above will take you to the latest article produced this morning in the Cyprus-Mail online newspaper).
Here are the outlines of the financial package:
- Nicosia will impose a 9.9 per cent one-off levy on deposits above €100,000 in Cypriot banks and a tax of 6.75 percent on smaller deposits from March 19. The levy will generate €5.8 billion.
- Depositors will be compensated by equity in the banks.
- There will also be a tax on interest that the deposits generate.
- Cyprus has agreed to increase its nominal corporate tax rate by 2.5 percentage points to 12.5 per cent, which could bring in up to €200 million a year.
- The International Monetary Fund is expected to contribute to the rescue package, but the amount is still to be determined.
- Russia will likely help finance the programme by extending a 2.5 billion euro loan already made to Cyprus by five years to 2021 and reducing the interest rate, which is now at 4.5 per cent.
- Cyprus may be required to privatise the Cypriot telecoms company, the electricity company and the ports authority.
- Cyprus will have to downsize its banking sector, reducing it to the EU average by 2018. The size of the banking sector in Cyprus is more than eight times the size of the economy, compared to around 3.5 times in the EU.
This morning, the cabinet will meet to discuss draft bills emanating from the Eurogroup decision, while president Anastasiades will also meet with the House Finance Committee before addressing parliament and the nation at 11.30am.
So, what kind of a weekend did you have?
Related article: “They took our money while we were sleeping”