For Cyprus, The Pain Is Only Just Starting

Tyler Durden's picture

If the suffering, yet docile, Cypriot serfs thought deposit confiscation would be the end of their problems under the European feudal system, they are about to be shocked. Because as part of their banking sector bailout, the country is set to get a "loan" from the Troika, a loan which comes with a Memorandum of Understanding, aka a "blueprint for austerity", with dictates terms for government revenue increases and spending cuts (of the variety that nearly caused America's leader to blow a gasket when he was describing the untold devastation that would result if the rate of acceleration in US budget spending dared to be slowed down even by a tiny bit). Today, a draft of the revised Cypriot MOU being prepared by the head of the IMF mission to the island nation, Delia Velculescu, leaked and can be found in its 24 page entirety here. However, for the benefit of our Cypriot readers, here is the important part: the listing of the anticipated austerity tsunami coming, not to mention healthcare system, "pension reform" changes and other proposals the ECB and the IMF are imposing on Cyprus as part of their generosity to keep the recently insolvent country as a well-behaving serf in the Eurozone.

Key highlights:

  • Freeze public sector pensions
  • Increase the statutory retirement age by 2 years for the various categories of employees
  • Reduce preferential treatment of specific groups of employees, like members of the army and police force, in the occupational pension plans, in particular concerning the contribution to the lump-sum benefits;
  • Reduce certain benefits and privileges for state officials and senior government officials, in particular by
    suspending the right to travel first/business class by state officials,
    senior government officials and employees with the exception of
    transatlantic travel.
  • Increase excise duties on energy, i.e., on oil products, by increasing tax rate on motor fuels (petrol and gasoil) by EUR 0.07
  • Increase the standard VAT rate from 17% to 18%.
  • Introduce a tax of 20% on gains distributed to winners of betting by the National Lottery for winnings of EUR 5,000 or more
  • Increase fees for public services by at least 17% of the current values
  • Increase excise duties on tobacco products, in particular on fine-cut smoking tobacco, from EUR 60/kg to EUR 150/kg. Increase excise duties on cigarettes by EUR 0.20/per packet of 20 cigarettes.
  • Introduce a permanent contribution of 3% on pensionable earnings to Widows and Orphans Fund by state officials who are entitled to a pension and gratuity. Introduce a contribution of 6.8% on pensionable earnings by officials, who are entitled to a pension and gratuity but are not covered by the government's pension scheme or any other similar plan;
  • Actuarially reducing pension entitlements from the General Social Insurance Scheme by 0.5% per month for retirements earlier than the statutory retirement age at the latest from January 2013, in line with the planned increase in the minimum age for entitlement to an unreduced pension to reach 65 (by 6 months per year), between 2013 and 2016;
  • Ensure a reduction of seasonal hourly paid employees by 992 from 1806 in 2012 to 814.
  • Implement a four-year plan as prepared by the Public Administration and Personnel Department aimed at the abolition of at least 1880 permanent posts over the period 2013-2016.
  • Ensure additional revenues from property taxation of at least 70 million by updating the 1980 prices through application of the CPI index for the period 1980 to 2012
  • Increase the statutory corporate income tax rate to 12.5%; Increase the tax rate on interest and dividend income to 30%.
  • Increase the bank levy on deposits raised by banks and credit institutions in Cyprus from 0.11% to 0.15% with 25/60 of the revenue earmarked for a special account for a Financial Stability Fund
  • Undertake a reform of the tax system for motor vehicles, based on environmentally-friendly principles, with a view to raising additional revenues, through the annual road tax, the registration fee and excise duties, including motor fuel duties.
  • Ensure a reduction in total outlays for social transfers by at least EUR 113 million through: (a) the abolition of a number of redundant and overlapping schemes such as the mothers allowance, other family allowances and educational allowances; and (b) the abolition of supplementary allowances under public assistance, the abolition of the special grant and the streamlining of the Easter allowance for pensioners.
  • Ensure a reduction of at least EUR 29 million in the total outlays of allowances for employees in the public and broader public sector by i) taxing pensionable allowances provided to senior government officials and employees (secretarial services, representation, and hospitality allowances) in the public and broader public sector  ii) reducing the allowances provided to broader public sector employees and reducing all other allowances of broader public sector employees, government officials and hourly paid employees by 15%; and iii) reducing the daily overseas subsistence allowance for business trips by 15%. Ensure a further reduction the subsistence allowance of the current allowance when lunch/dinner is offered by 50% (20% - 45% of overseas subsistence allowance instead of 40% - 90% currently paid).

And last but not least:

  • Increase excise duties on beer by 25% from EUR 4.78 per hl to EUR 6.00 per hl per degree of pure alcohol of final product. Increase excise duties on ethyl alcohol from EUR 598.01 to EUR 956.82 per hl of pure alcohol.

So the stronger the booze, and the faster it gets one drunk, the more expensive is will be.

In brief: for the Cypriot serfs the pain is just starting.

Troika Draft MOU source

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Van Halen's picture

Things like this make me want to buy more silver.

kaiserhoff's picture

Hell, Barry got more horror stories than that out of the sequester.  God save the Easter Egg Hunt!

I'm glad they are only going after "redundant and overlapping" welfare payments.  /sarc.

Government will be the last thing anyone cuts.

Cheesy Bastard's picture

If by "silver" you mean "ammunition", then yes, I agree.

Bicycle Repairman's picture

This is the template.  This is the "wish list"

mikla's picture

And, if anybody believes the words written on paper, they are crazy.

This "contract" will be rewritten, arbitrarily, and not in the Cypriot's interest.  Whenever the Troika decides it feels like it.

There is no contract.

Supernova Born's picture

No man is an island,
Entire of itself.
Each is a piece of the continent,
A part of the main.
If a clod be washed away by the sea,
Europe is the less.
As well as if a promontory were.
As well as if a manor of thine own
Or of thine friend's were.
Each man's death diminishes me,
For I am involved in mankind.
Therefore, send not to know
For whom the bell tolls,
It tolls for thee.

-John Donne

Ahmeexnal's picture

If you want a vision of the future of Cyprus, imagine a german boot stamping on a cypriot face....for ever.

francis_sawyer's picture

Don't worry you poor CYPRIOTS... It'll all be over soon...


We're fucking JEWS ~ MASTERS OF THE UNIVERSE... [HATED by most]...

Your suffering will be short lived... SOON ~ We take over your little pathetic island [CLOSE TO OUR TERRITORIAL pathetic litttle homeland ~ which we STOLE by treaty]....


If you have any questions ~ please contact the CITY OF LONDON & THE PENTAGON...

Ahmeexnal's picture

OK, we get it. You wear a burkha and a nazi armband.

Cojones's picture

Go figure: All these measures have long been imposed in the Netherlands and believe it or not, the sheeple never complained. S never HTF. What's happening in Cyprus now, are everyday facts in Germany, The Netherlands and Scandinavia. 

21% VAT, €5.80 for a pack of 19 Luckies, €1.75 for a litre of regular. 

My point? The Cypriots will get used to this enslavement and will join the Dutch and Germans in singing Kumbaya, huddled around a campfire of Euro bills.

BurningFuld's picture

Mexican guy with a restaurant in town. He has a cash machine in the entrance and only takes cash.  FYI!

Theosebes Goodfellow's picture

And I bet you he owns the ATM and makes another 4.5% per transaction!

Jethro's picture

I'd hoped for more from my northern cousins. I guess that Tuetonic spark is gone. May their chains rest lightly....

Azannoth's picture

True Story, (working) Germans are paying through the nose to keep their Welfare state going and most are unhappy about it (yet dont loudly complain nor even try to vote against it), the human is an irreparable condition

BooMushroom's picture

Troika: "We have altered the deal. Pray we do not alter it further."

sunnydays's picture

The Iceland solution is better than that list!  I really hope the parliament comes to the correct decision and tells the EU to Stuff it!

stocktivity's picture

I was ok with it until the beer tax came up

TheFourthStooge-ing's picture

Time for Cypriots to grow their own weed and tobacco.

Theosebes Goodfellow's picture

My thoughts exactly! "Hello!" to bootlegging.

villainvomit's picture

please tell me where you are buying ammo at decent prices.........

graspAU's picture

and if by "silver" you mean bourbon and vodka, then yes, I agree.

booboo's picture

"Government will be the last thing anyone cuts" .....but it will be cut

(See Greece,) and Stockton Californication. Public Sector serfs will be slaughtered just like in Greece, see the game plan is keep the pedal to the metal in every country until each one, one after the other goes off the cliff. Americans will be sitting in their chairs eating their buttered popcorn thinking "those poor bastards" as the grim reaper slides in behind them. Even to the very last one they will be saying, "at least my pension is safe"



max2205's picture

Troika needs to visit ca il mi nj md fl ny ect

logicalman's picture

Who, in their right mind, cuts themselves?


Go Tribe's picture

I think most of the demands a reasonable. They are aimed at slashing gov expenditures and shrinking its size. I would only like to see also mandatory death sentences for bankers found guilty - of anything.

daxtonbrown's picture

How is this course different than the crushing of Germany after the Armistice? Thank God Bernanke and those running the ECB are smarter than we mortals or we'd be SOL.

Key-Rick's picture

Because Cyprus can't print Euros.

jeff montanye's picture

and it doesn't follow cyprus killing five million people, albeit largely soldiers.

steve from virginia's picture





@ Van Halen:


"Things like this make me want to buy more silver."


Things like this make me want to buy a machine gun.

fourchan's picture

the world that has been enslaved, by dishonest money, and international bankers, pain has just begun.

Supernova Born's picture

Shadow banking? More like shadow government itself.

willwork4food's picture



Stock Tips Investment's picture

It is regrettable to see how European countries are falling. One after another, are entering crisis. Their governments bankrupt and banks fail. Unemployment rises and consumption falls. The rights disappear. And obligations increase. The people get depressed and start looking for the culprits. The government ... bankers ... investors. It's worth the search? No. It is better to take the medicine. Despite its bad taste, it is better to take it quickly.

McMolotov's picture

They're gonna need a bigger boat... to get everyone the fuck off that island.

machineh's picture

They're gonna need a bigger boat... to get all them euros the fuck off that island.

fixed it ... shall we partner on a fast cigarette boat?

TeamDepends's picture

Long pirate enterprises.

JPM Hater001's picture

Pirates did't loot their hangouts-

The best part for me is the Cypriots still haven't hanged anyone.

That means they still don't understand what's happening...

bank guy in Brussels's picture

Yes, all them little boats running arms into Lebanon and Syria nearby, can detour for a little Cyprus money-running action

One thing Greeks and Cypriots both understand, is how to run a little boat discreetly

And I wonder if the Cypriot plan is to just pretend to play along, while continuing to withdraw all their euros, maybe even till everyone with € 100,000 gets it all ... at € 300 max per day that will take 334 days

Tho all of the euro-zone is liable to blow up well before then

disabledvet's picture

gobblygook! balderdash! bullshit baffling blunderbuss's of doom!

stocktivity's picture

"OK folks...Let's calmly load the boats...Woman and children first...."   "oh wait"!    "Bankers and Politicians first!"

machineh's picture

So the stronger the booze, and the faster it gets one drunk, the more expensive is will be.

Fortunately hemp grows pretty well in Cyprus.

And the black market is tax free.

*blows a lazy smoke ring from the vape*

SemperFord's picture

Not just in Cyprus...just saying

fourchan's picture

federal reserve system

not federal
has no reserves

and the system.
to enslave a free nation to debt and capture all assets
through boom and bust cycles it creates with debt created
out of thin air.
the system has been working perfectly for 98 years,
and it is still working perfectly.

TeamDepends's picture

And how many chumps will feed the beast on the 15th?

fourchan's picture

me either, i checked out around 2004, i decided why work to pay taxes when i can completely avoid it?

why not aid the destruction of the system of evil, im thinking of applying for an ebc card and applying for social security.

markovchainey's picture

Can I buy some rope?  I have...uh...something I need to hang!

villainvomit's picture

Do they have high rises ? Gravity is a bitch !  So is concrete in an ocean !

BooMushroom's picture

Cement is one of their main industries. And there are plenty of citrus trees to hang bankers from. If they ever set foot on the island.