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Georgiades reiterates commitment to restore bailed in provident funds, ETYK says

Finance Minister Harris Georgiades reaffirmed the government’s commitment to rehabilitate provident funds “soon” which lost money in Cyprus’s 2013 banking crisis, bank workers’ union ETYK said.

Harris Georgiades“The issue will be the subject of a dialogue in the immediate future,” ETYK said in a statement on its website on Thursday, two days after a meeting with the finance minister. “In the context of this dialogue, our organisation will have the opportunity to submit its positions about the parameters of its enactment. Georgiades stressed in our meeting that further strengthening the provident fund’s institution constitutes an immediate priority for the government which our organisation welcomed with satisfaction”.

ETYK added that the union is ready to “contribute” to the dialogue with opinions and its experience and said that the finance minister agreed with the union’s finding that “unifying provident funds” and in particular those of banks which ETYK always pursued is an imperative.

According to the terms of Cyprus’s bailout agreed in March 2013, provident funds which had money deposited at Bank of Cyprus lost 47.5 per cent of their deposits in excess of €100,000 while those which had money at Cyprus Popular Bank, widely known as Laiki, lost all their uninsured deposits. Bank employees lost dozens of million euros when their provident funds were bailed in.

In April, the parliament passed a law which shields provident fund members from possible future bail-ins as provided by the law based on European bank recovery and resolution directive. According to the new law, the haircut on provident fund deposits will apply to €100,000 per account in a provident fund.

TETYKhe government pledged to pay back to provident funds 22.5 per cent of the money lost in the bail-in as soon as conditions allow. This will limit the provident funds’ loss to 25 per cent.

On August 2, the chairman of DISY Averof Neophytou said that as the improved performance of Cyprus’s economy, which exited last year from a prolonged recession, allows for the state to start restoring financial wounds.

Cyprus’s government debt rose last year to 108.9 per cent of gross domestic product, the highest level ever. The government is expected to generate a balanced budget this year after posting a fiscal deficit of 1 per cent last of economic output year.

The finance minister was unavailable for a comment.

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