NEWS

Anastasiades eyes national unity gov’t in Cyprus, where bailout foresees tax hikes, job cuts

President Nicos Anastasiades is examining the possibility of forming a government of national unity as Cyprus prepared to agree a bailout with the troika that will include tax hikes, wage cuts and job losses.

“We are in a state of emergency,” Transport Minister Tasos Mitsopoulos, a long-standing associate of Anastasiades, told Athens-Macedonia News Agency on Monday.

He added that Anastasiades had “inherited a mess” and was considering an offer to Communist AKEL and Socialist EDEK to participate in his conservative government.

Responding to a question on Monday regarding financial help from Greece, the president stressed that Cypriots should not be expecting money from Athens following reports that he would make a fresh request for money from Greece’s bank recapitalization fund.

“This is not Greece’s duty,” he said. “We have to work on our own to build a new era.”

In an interview with Fileleftheros newspaper on Sunday, Anastasiades outlined a 12-point plan to revive Cyprus’s economy.

The president said he would allow casinos to operate in Cyprus, as they do in the occupied northern part of the island. He also proposed tax incentives for companies that reinvest profits in Cyprus, encouraging banks to lend for longer terms at lower rates and issuing property development permits within 30 days.

His proposals came as details of the memorandum of understanding that Cyprus is to sign with the troika as part of its 10-billion-euro bailout were leaked to the media.

The terms include raising the corporate tax rate from 10 percent to 12.5 percent, increasing the tax on interest and dividends to 30 percent and hiking value added tax from 17 to 19 percent.

The memorandum also calls for 5,000 civil servants to be fired by 2016 and for their retirement age to rise by two years.

It also envisions 1.4 billion euros being raised from privatizations and calls on Nicosia to keep its lenders fully briefed regarding its plans for the exploitation of hydrocarbons.