NICOSIA: Finance Minister Michalis Sarris resigned on Tuesday, hours after a probe was launched into how Cyprus was pushed to the verge of bankruptcy before having to agree a crippling eurozone bailout.
Sarris said he was stepping down as he would need to cooperate with judges investigating the failure of Laiki Bank, of which he was chairman for much of last year. The bank's collapse was a major contributor to the island's near financial meltdown.
"I believe that in order to facilitate the work of (investigators) the right thing would be to place my resignation at the disposal of the president... which I did," he said.
President Nicos Anastasiades accepted the resignation with "sadness" and lauded his "high political ethos" for stepping down to facilitate the probe.
He named current labour minister, 40-year-old economist Haris Georgiades, to replace Sarris, spokesman Christos Stylianides said.
Zeta Emilianidou, permanent secretary at the commerce ministry, becomes the first woman in the cabinet, taking over from Georgiades.
Meanwhile, the government wrapped up talks with international lenders that will open the way for Cyprus to receive a 10-billion-euro bailout, Stylianides said.
"Today we have completed the forming of the memorandum, which is a precondition for the loan agreement," with the period to implement the deal extended by two years to 2018 to "ease pressure on the economy".
Among other concessions, he said Cyprus had "shielded... sovereign rights regarding the planning, exploitation and management of income from natural gas," with still untapped offshore fields thought to be worth billions of euros.
Stylianides took an indirect swipe at former president Demetris Christofias, who sought the bailout in June but failed to clinch a deal before elections in February.
It "should have taken place a lot sooner, under more favourable political and financial circumstances," he said. "Even with this delay, the situation is now normalising, stabilising and the conditions to restart the economy are created."
Cyprus is already in recession, and Sarris said "2013 will be a very difficult year, and the beginning of 2014 will also be difficult. Beyond this I believe the prospects are positive."
Meanwhile, the central bank eased capital controls imposed last week, raising the limit on business transactions from 5,000 euros to 25,000 and allowing people to issue cheques of up to 9,000 euros.
With public anger mounting, the government set up a judicial inquiry on Tuesday into the banking collapse.
Anastasiades said nobody was immune from the inquiry, and called on the commission headed by former supreme court judge George Pikkis to investigate himself and his relatives as a "matter of priority" and with "extra vigour".
This is seen as a move to counter unsubstantiated allegations that family members used privileged information to get money out of the country before deposits were locked down.
Other leading politicians and business figures have also been accused of taking advantage of their position to protect their assets from a hit on bank deposits imposed by EU-led creditors last week.
Meanwhile, central bank official Yiangos Demetriou told state radio savers in the island's largest lender, Bank of Cyprus, would now be able to access 10 percent of their deposits more than 100,000 euros.
But he added the representatives of the troika -- the European Union, European Central Bank, and International Monetary Fund -- had asked for more information before agreeing to release the full 40 percent of deposits over that threshold that savers can be sure of retaining.
Larger depositors could lose all of the remaining 60 percent of their balances over 100,000 euros depending on the costs of winding up and merging second-largest lender Laiki.
Savers in that bank will have to wait years to see any of their cash over 100,000 euros.
Banks have been operating under stringent capital controls since they reopened on Thursday, after a near two-week lockdown prompted by fears of a run on deposits.
Central Bank of Cyprus governor Panicos Demetriades said the remaining controls would be eased in stages.
"I can't really tell you if it will be seven or 14 days before capital controls end," he told the Financial Times. "We have to lift them gradually."
<Center><b><i>Copyright AFP (Agence France-Presse), 2013</b></i></center>
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