Cyprus Mail

Capital controls to be lifted except cross-border transfers (UPDATED)

Among the current controls is a restriction of EUR300/day in ATM withdrawals

By George Psyllides

FINANCE Minister Harris Georgiades said yesterday that all capital controls would be lifted in the first months of 2014 except in the case of transferring money abroad.

Cyprus agreed on a road map for lifting restrictions although no exact timeframe had been set.

“Converting the roadmap into a timeframe brings us to the first months of the new year,” Georgiades said.

He added that it concerned all restrictions bar one, “the most sensitive, which is cross-border flow of capital.”

The finance minister voiced optimism that Cyprus would not go down the same path as Iceland when it came to lifting restrictions.

“Maybe I am very optimistic but I think our experience so far shows that we are following a course that is different from that of Iceland,” he said.

Iceland introduced “temporary” controls following the collapse of its banking system. The measures remain in place today around five years later.

Cyprus introduced capital controls in March to prevent a bank run as uninsured deposits were seized to recapitalise stricken lenders.

It was the first time in the history of the eurozone that restrictions in the movement of money were imposed.

The minister conceded that it was difficult to lift such restrictions from the moment they were introduced, but Cyprus has gradually relaxed controls and bank transactions were being carried out without any problems.

“I am more worried about the negative climate created by maintaining these restrictions instead of their real effects,” Georgiades said.

President Nicos Anastasiades meanwhile said the plan was to lift capital controls by January, as he pledged that Cyprus would be the best at implementing a bailout agreement with international lenders

“The goal right now is to create the conditions for growth and tackle the serious problem of unemployment, to stabilise the financial system,” Anastasiades said in an interview with Bloomberg. “The controls are being lifted. They will end within a timeframe of January 2014.”

The president said Cyprus will be “the best” at implementing the agreement with the EU and the IMF.

“What’s important too and a good sign is the behaviour of Cypriots, a responsible stance, without reactions, without strikes, labour peace,” he told Bloomberg. “I believe that sooner than expected we will again be in a position to go to the markets, but also to create encouraging prospects for the country.”

The EU and the International Monetary Fund (IMF) this week released the second tranche of the €10 billion bailout.

IMF Managing Director Christine Lagarde said the country had made “commendable” progress in stabilizing its finances but warned against fiscal slippage.

“Risks to the programme remain substantial, leaving no room for implementation slippages,” Lagarde said in a statement. “Continued strong ownership, including steadfast policy implementation, is critical for the programme’s success.”

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