With 43 votes in favour and 7 against the House of Representatives passed into law the National Investment Fund and the Cyprus Investment Management Organization and related issues bill, which sets up the legislative framework for the establishment and operation of the National Investment Fund, under the provisions of the Financial Liability and Financial Framework Law.
The law contains an amendment to the bill tabled by DISY and AKEL which stipulates that the Fund will not be linked to public debt. This point is considered by analysts as a responsible step and a public policy success. The explanation reads that the creation of the Fund must be institutionalized in a way that ensures its proper operation and performance through investments for the benefit of all Cypriots.
Under the Law, the Investment Fund has the following objectives:
- Creating an alternative cash flow for the State Budget that allows for a safety margin for public finances and the economy against large fluctuations in hydrocarbon prices, with accumulation of assets at high yield periods.
- Investing surpluses in international financial assets with sufficient diversification to secure future generations or other long-term goals.
- The Fund may not be used as a guarantee and / or collateral for borrowing by the General Government. In addition, all the Republic's revenues from hydrocarbons are deposited with the Republic's account and, after deduction of the operating expenses, the remaining available amount will be transferred to the Fund.
- The law also provides for the establishment of an independent "Cyprus Investment Management Agency", which will primarily provide investment management services and establish and maintain a Permanent Risk Management Unit, the work of which may be outsourced.