Cyprus plans to lift a ban on casinos and offer firms tax exemptions on profits reinvested on the island under a package of reforms to kickstart its ailing economy, its president said on Monday.
The country's euro zone partners agreed on a 10 billion euro ($12.8 billion) rescue package last Monday after weeks of tense negotiations that showed the debt crisis racking the 17-nation currency union is far from over.
The tough terms of the deal look set to deepen the island's recession, shrink its banking sector and lead to thousands of job losses, while the capital controls imposed to prevent a run on Cypriot banks may test the ties that bind the single-currency bloc as a whole.
President Nicos Anastasiades, who briefed ministers on the economy at an informal meeting on Monday, said the 12-point growth plan would be put to the cabinet for approval within the next 15 days.
The program includes measures to attract foreign investment to the island - a hub for offshore finance - as well as tax exemptions on business profits reinvested there, and the easing of payment terms and interest rates on loans.
With about 68 billion euros in its banks, Cyprus has a vastly outsized financial system that attracted deposits from abroad, especially Russia.
In a bid to attract more tourists to the south of the island, it also hopes to lift a ban on casinos, which so far only operate legally in Turkish-controlled northern Cyprus.
Speaking to reporters after a memorial service to commemorate the 1955 armed campaign against British rule, Anastasiades said the government would focus on "growth and incentives for growth."
Cyprus's bailout is the first to impose steep losses on depositors with more than 100,000 euros in their accounts, and is expected to hit business activity especially hard.
Asked to make a forecast on the likely depth of recession Cyprus faces, government spokesman Christos Stylianides said: "It's not possible at this time to put numbers on the recession."
"The government, having inherited an atomic bomb, tried to deactivate it and in doing so spared this country from total bankruptcy. It is now dealing with a post-earthquake period with the aim to kickstart the economy," he said.
Stylianides said the cabinet discussed pending issues in the country's negotiations with its international lenders relating to the financial sector, fiscal adjustment measures, structural measures in the public sector and energy issues.
He said Anastasiades would also chair a meeting of party leaders at 6.00 p.m. London time to brief them on the matter.
Under the bailout deal, major depositors in Cyprus's biggest lender, Bank of Cyprus, will lose around 60 percent of savings above 100,000 euros.
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The country's banks reopened on Thursday after a nearly two-week hiatus aimed at averting a bank run, but the ripple effect of their closure is likely to strangle business on the island for a long time to come.
There are also concerns that depositors in other struggling euro zone nations could take fright at the conditions imposed on Cyprus, although there have been no signs of bank runs.
The capital controls imposed on the country raise questions about the long-term viability of the euro.
There is also the risk that euros on the island may be valued differently to those in the rest of the bloc due to them being less liquid as a result of the controls.
Anastasiades has defended the rescue deal as painful but essential, saying that without it, Cyprus had faced certain banking collapse and risked becoming the first country to be pushed out of the European single currency.