Cyprus’ government decided to set up an Investment Solidarity Fund, in a bid to secure the required €5.8 billion to unlock the €10 billion financial assistance package of the European Stability Fund to Cyprus.
The creation of the Fund comes in the wake of the rejection of a controversial tax levy on banking deposits agreed by the Cypriot government and the Eurogroup last Saturday.
"Following a proposal by the President of the Republic there was a consensus reached and a unanimous decision was taken for the establishment of an Investment Solidarity Fund. The proposal is currently undergoing legal and technical processing by the Law Office of the Republic," Government Spokesman Christos Stylianides said in a written statement.
He added that "if it is considered necessary, on the basis of the legal and technical processing, the Council of Ministers will convened immediately in order to approve it, and it will be forwarded to the House of Representatives for the rest."
The levy was rejected by the Cypriot parliament last Tuesday by an overwhelming majority. Excluded from the international markets, Cyprus applied last June for financial assistance from the EU bailout mechanism, after its banks sought state support following massive write downs of the Greek bond holdings amounting to €4.5 billion or 25% of the island`s GDP, as result of the Greek sovereign debt haircut.
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