Cypriot Finance Minister Michael Sarris resigns

Tuesday 02 April 2013 21.56
The resignation of Michael Sarris was accepted by the government
The resignation of Michael Sarris was accepted by the government

The Cypriot finance minister has resigned after concluding talks with foreign lenders on a bailout that forced the country to put unprecedented losses on bank depositors in return for aid.

The news of the resignation of Michael Sarris came after Cyprus announced a partial relaxation of currency controls.

It has raised the ceiling for financial transactions that do not require central bank approval, but has kept most other restrictions in place.

Mr Sarris said his main goal of agreeing a deal with lenders had been accomplished.

He said it was also appropriate to resign since he was among several people under scrutiny by a team of investigators looking into the collapse of the country's banking system.

His resignation was accepted by the government.

"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," Mr Sarris said.

Before quitting, he said it was not clear when the remaining capital controls would be lifted.

Cyprus introduced curbs on money movements when banks reopened on 28 March after a two-week shutdown while the government negotiated a €10 billion bailout from the International Monetary Fund and the European Union.

Cyprus's status as a financial hub has crumbled in the space of a fortnight after authorities were forced to winddown one bank and put heavy losses on wealthier depositors in a second in return for the financial aid.

Its capital controls are a first for the eurozone, introduced by Cyprus as it strives to prevent a cash drain.

A finance ministry decree today, the third since controls were first introduced, raised the ceiling on transactions that do not require central bank approval to €25,000 from €5,000.

It also permits the use of cheques worth up to €9,000 per month.

Other restrictions introduced last week, including a €300 per day cash withdrawal limit and a €1,000 limit on the amount travellers can take overseas, remain in place.

The decree - signed by Mr Sarris and dated 2 April - is valid for two days.

Cypriot officials have said it could take up to a month for restrictions to be fully removed.

Cypriot President Nicos Anastasiades said he was forced to accept onerous terms imposed by lenders to avert a default and an exit by the country from the eurozone.

Under the terms of the deal, Cyprus will have until 2018 to carry out measures to shore up its finances and begin to receive aid starting in May.

It will pay an interest rate of 2.5% on its rescue loans, with repayment starting in ten years. The loans will be repaid over 12 years.

Keywords: cyprus