Restrictions introduced to prevent run on banks due to be lifted on domestic transactions on Friday, say finance ministry officials
Almost a year after it was bailed out to the tune of €10bn (£8.2bn), Cyprus is expected to relax capital controls within the country on Friday.
The restrictions, which were introduced to prevent a run on banks after depositors with more than €100,000 (£82,000) in savings were hit with losses as the price of aid, are due to be lifted on domestic transactions, finance ministry officials told the Guardian.
"There will definitely be some relaxation but I don't want to go into specifics as the markets could take advantage if it got out," said one well-placed insider. "All these steps are in the right direction but there is still a long way to go."
Last week, Cyprus's finance minister, Harris Georgiades, said the easing of controls would be substantial. "Starting next week we will have significant relaxations of the restrictive measures," he told reporters after the island's fiscal progress was applauded by mission heads representing its "troika" of lenders – the EU, the European Central Bank and the International Monetary Fund.
Although restrictions have been relaxed since the country's near economic collapse, cash withdrawals are still limited to €300 a day, the cashing of cheques forbidden, while large cash transfers have to be vetted. In a first for a eurozone state, savers are also forbidden from breaking time deposits.
When the controls were first introduced Cypriots were told they would last only four days.
But in a sign the Cyprus is gradually edging towards recovery, its central bank chief, Panicos Demetriades, has not ruled out all capital controls being lifted by the end of the year – if the country continues to make "substantive progress" in implementing its economic reforms.
"That is expected to happen, if all goes well, by the end of the year," he said last week, adding that he expected nearly all domestic controls to be removed in the next round of easing of controls.
The lifting of domestic restrictions would precede the easing of controls on transactions abroad cited by businessmen as the biggest single obstacle to foreign investment on the island. Helena Smith
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