Cyprus turns to tourism and casinos to kickstart economy

Cyprus’ president said Friday that the bailed-out country will open casinos and bolster its tourism sector to get the economy going again.

Nicos Anastasiades unveiled a first batch of measures he said are designed to boost growth in an economy that is projected to shrink by 13 percent until 2015.

Anastasiades included casino openings among campaign pledges before his election in February.

He said Cyprus would fork out 21 million euros ($27.54 million) to partly subsidize salaries for 6,000 jobless people that will be hired in the tourism sector, give businesses tax breaks for hiring new workers and set up solar energy parks.

Young people will be granted state and church-owned land for cultivation. And those having homes or businesses seized because they’re unable to pay off loans would be able to stay on as renters, he said.

Cyprus agreed last month on a 23 billion euro ($30 billion) rescue package with its euro area partners and the International Monetary Fund.

The tiny country of less than 1 million people will shoulder 13 billion euros ($17.05 billion) of overall cost of the bailout mainly by imposing heavy losses on bank deposits more than 100,000 euros ($130,000). The country’s second largest lender Laiki will be broken up into a “good” bank which will be folded into the larger Bank of Cyprus and a “bad” bank which will be wound down.

The two banks had lost billions on their holdings of Greek government bonds after that country’s debt restructuring.

According to audit firm PIMCO, Bank of Cyprus will need 3.96 billion euros and Laiki 3.835 billion euros to restore their capital buffers by June, 2015 under the firm’s adverse scenario.

Cyprus’ third-largest bank Hellenic will need 333 million euros; cooperative banks will need 589 million euros.

The figures are included in a document that a banking official provided to The Associated Press on condition of anonymity because the recapitalization needs of each individual bank haven’t been made public.

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