Cyprus plans to extend unemployment benefits, loan repayment period

Cyprus is preparing legislation that will extend unemployment benefits and give loanholders longer to repay their debts to banks, Cypriot government spokesman Christos Stylianides told public broadcaster RIK on Saturday.

However, Stylianides insisted that there would be no haircut for depositors who had their money saved in Cyprus’s cooperative banks. He suggested the island’s attorney general should investigate the provenance of such reports.

Cyprus continues to maintain capital controls in the wake of the resolution of Cyprus Popular Bank (Laiki) and the haircut on depositors at Bank of Cyprus. There is concern in Nicosia about capital flight once the restrictions are lifted.

A senior Finance Ministry official said that Cyprus could suffer an “uncontrolled hemorrhage” of deposits if capital controls are revoked.