Posted by: youngragingbull | April 3, 2013

IMF & Cyprus finalize rescue package details

The International Monetary Fund and Cyprus finalized arrangements for the now infamous rescue package Wednesday morning that will see eurozone partners contributing €9 billion to the island-nation with the IMF extending another €1 billion in emergency credit in exchange for major fiscal policy changes.

Under the terms of the agreement, deficit-reduction efforts already under way– estimated at around 5% of GDP — will be supplemented by measures worth an additional 2% of GDP. That includes a hike in the corporate income tax rate to 12.5% from 10% and the tax rate on interest income from 15% to 30%.

Cyprus will aim to achieve a 4% primary surplus — a measure of the budget minus interest payments — by 2018.

“This is a challenging program that will require great efforts from the Cypriot population. We believe that it provides a durable and fully financed solution to the underlying problems facing Cyprus and provides a sustainable path toward a recovery,” IMF Managing Director Christine Lagarde said in a statement.

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