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Cyprus

Deputies set conditions for releasing money for Solidarity Fund

Lawmakers on Monday sought more details from the government before agreeing to release €25 million to be used for the Solidarity Fund.

Enacted in March 2019, the Solidarity Fund aimed to provide relief to legacy Laiki depositors and bank bondholders whose investments were wiped out in the 2013 bail-in.

The €25 million to be spent this year on the fund was included in the state budget for 2021. But when parliament passed the budget in January, MPs decided to ‘quarantine’ the amount in question – meaning the government would have to come back at a later stage and request its release.

The finance ministry is now asking parliament to release the €25 million – but MPs first want more information, such as the number of eligible persons for the relief, the eligibility criteria, and whether there is a cap on the amount to be paid to any one eligible individual.

Answering questions in parliament on Monday, a finance ministry official said work was still ongoing on the electronic system which eligible individuals would use to apply for the relief.

The Solidarity Fund was allocated €55m in start-up funds, with the government promising to finance it from state grants and proceeds from the use of state property.

The events of March 2013 saw the loss of €7.7bn in deposits (amounts over €100,000). In addition, anywhere from €1.2bn to €1.5bn in contingent securities were converted into equity (bank shares) of practically zero worth.

The total amount in compensation claims by bondholders in court cases comes to an estimated €400m.

The government has made it clear that the assistance to be given to the victims of the 2013 haircut is not ‘compensation’, as that might suggest the state was legally liable for the bail-in.

The government has acknowledged that only a fraction of the bail-in losses would be covered.

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