By Stelios Orphanides
Finance minister Harris Georgiades said that the government will begin to compensate provident funds for losses suffered in Cyprus’s 2013 banking crisis after the completion of its adjustment programme and the upgrade of its sovereign rating to investment grade, the Cyprus News Agency reported.
The pledge based on a government commitment to provident funds which lost €300m, remains in place, the agency quoted the finance minister as saying.
Georgiades who was addressing members of the parliamentary finance committee said that while the government’s intention was to contain losses of pension funds to 25 per cent of their deposits at the bail-in, international creditors accepted that their losses should be limited to 47.5 per cent, comparable to losses of uninsured depositors at Bank of Cyprus.
International creditors considered provident funds as institutional investors and therefore, their compensation would be adequate, Georgiades added.
Georgiades added that it conditions making such a compensation scheme implementable could emerge when Cyprus regains its investment grade rating and can borrow at a cost below 4 per cent.