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Cyprus president rules out bank deposits "haircut"

03-08-2013 06:17 BJT

NICOSIA, March 7 (Xinhua) -- Cyprus President Nicos Anastasiades said Thursday that he will not accept under any circumstance a "haircut," or imposed losses, on deposits in Cypriot banks in exchange for a bailout, as demanded by some European Union countries.

Anastasiades met the heads of a team representing the troika, namely the European Commission, the European Central Bank and the International Monetary Fund, to discuss details of a bailout accord of some 17 billion euros (22.05 billion U.S. dollars) expected to be finalized by the Eurogroup by the end of this month.

Finance Minister Michael Sarris, who was present at the meeting, said the president had set down his red lines in the negotiations.

"The president reiterated the government's determination to proceed as soon as possible with the completion of the loan agreement and set out to the troika representatives the issues which will not be included in the talks," said Sarris.

Sarris said issues not on the agenda for discussion are a demand by German, Dutch and Finnish politicians for a loss to be forced on bank deposits of mainly Russian and British businesses and also a suggestion for Cyprus to raise its 10-percent corporate tax.

"Most of them (troika representatives) know that such a move, even talking about a haircut, has huge risks and Cyprus has paid a heavy price merely because of the fact that the subject has been discussed," said Sarris.

He was alluding to recent data released by the Central Bank of Cyprus showing that deposits in Cypriot banks dropped by 1.76 billion euros in January, representing a decrease of just below 3 percent compared to December 2012.

Sarris also excluded increasing the corporate tax as a way of answering charges that Cyprus is a tax haven.

"The government's position is that the stability of the tax regime as it has been in place since 2004, when Cyprus joined the European Union, is a corner stone of our economy," he said.

The troika has suggested these measures as a way of making the island's sovereign debt more manageable.

"We believe that we can find other ways, such as reducing expenditure or increasing income, to bring our debt where the markets can consider it manageable," the minister said.


Editor:James |Source: Xinhua

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