ECONOMY

In Brief

Cyprus firms to be hit with ‘social solidarity’ tax Cyprus will impose a «social solidarity» tax for two years on profit generated by Cyprus-registered companies, as part of efforts to reduce the country’s budget shortfall, Finance Minister Charilaos Stavrakis said. The tax will bring «considerable benefits and revenues,» and will be applied by increasing the corporate tax rate to 11 percent from 10 percent, he said in a speech in Nicosia on Wednesday. Cyprus’s government also decided to increase the tax rate for properties whose value exceeded 170,000 euros ($209,600) in 1980, the Ministry of Finance said in a separate e-mailed statement. Cyprus, the euro area’s second-smallest economy, had a fiscal deficit of 6.1 percent of gross domestic product in 2009 when the economy shrank 1.7 percent, compared with a 0.9 percent surplus in 2008. The government has pledged to decrease the budget deficit from 6 percent of GDP this year to 2.5 percent in 2013. (Bloomberg) ECB: Not enough done to bolster financial system PARIS (Reuters) – European Central Bank Governing Council member Athanasios Orphanides said yesterday that not enough progress had been made toward strengthening the European financial system in the wake of the global credit crisis. «Insufficient progress has been made to make the financial system more robust,» Orphanides, who is also governor of the Central Bank of Cyprus, told a conference in Paris. «This suggests that it is imperative to make fast progress toward strengthening financial stability in Europe.» Orphanides said ECB monetary policy during the crisis had delivered on its mandate of delivering price stability. However, he said the crisis confirmed that a central bank with a price stability objective but with insufficient regulatory powers could not ensure broader financial stability in the economy. «Without the right tools, a central bank cannot effectively deal with problems stemming from asset price misalignments and extending into other suspected financial imbalances in the economy,» Orphanides said. «Perhaps the most significant challenge ahead of us is how to improve the architecture of financial supervision and provide central banks with the appropriate tools so as to better contribute to maintaining financial stability.» Stress tests The results of stress tests being carried out on European banks will not be published before the beginning of July, a European Union source said yesterday. The tests could feature in the conclusions of the EU summit now taking place in Brussels, the source said. «It would appear difficult to me to make those results public before July,» she said, adding that it would be «possible» and «desirable» to refer to the tests in the summit conclusions. «A stress test has just been carried out by the Committee of European Banking Supervisors. We already have the first elements, now we need to complete tests for variations to the base scenario,» the source added. None of the scenarios foresees the possibility of a country’s bankruptcy and the goal of this publication would be to reassure the markets on the health of European institutions, notably Spanish ones, she said. (Reuters) Intralot investment Intralot SA, the world’s second-biggest gambling services provider, will use funds in 2010 for its acquisition of a 33 percent stake in Cyprus-based Kelicom, the main shareholder in Russian sports betting operator Favorit Bookmakers Office, the company said in a Athens bourse filing yesterday. The investment is a «relatively small part» of Intralot’s total investment plan for this year, the company said. (Bloomberg) OMV Petrom sale Romanian Economy Minister Adriean Videanu said the government may sell part of its stake in oil and gas company OMV Petrom SA in September on the Bucharest stock exchange to raise money for the budget. The government will discuss the sale on June 23, Videanu said in a televised press conference yesterday in Bucharest. (Bloomberg)