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EU gives Monday deadline to Cyprus for managing bailout

Last Updated: Thursday, March 21, 2013 - 22:58

Zeebiz Bureau

Niscosia/New Delhi: The near-bankrupt Cyprus has got the deadline of Monday from the European Union to raise the billions of euros for an international bailout or face the collapse of its financial system and likely exit from the euro currency zone.

With the crisis getting deeper and harder by the day, earlier, Cyprus has demanded the bailout decision for the country be made on Thursday.

According to reports, Cyprus President Nicos Anastasiades had demanded that a decision on a bailout deal for the debt-struck eurozone member be made on Thursday.

The European Union was plunged into a new crisis on Tuesday night after the Cypriot Parliament overwhelmingly rejected a bank levy plan agreed by the euro zone finance ministers at the weekend as part of a 10 billion-euro (13 billion dollars) bailout package for the cash-strapped nation.

As per the proposal, the EU ministers had on Saturday proposed that Cyprus banks impose a one-time levy of 6.75 percent on deposits between 20,000 euros and 100,000 euros and deposits above that level be charged 9.9 percent.

However, this was rejected by the Cypriot Parliament Tuesday night.

Banks in the country will remain closed Thursday and Friday as officials try to find a new plan to starve off bankruptcy.

Post the rejection by the Parliament to take a portion on bank deposits, the government has been looking for an alternative ways to scrounge up some 5.8 billion euros (USD 7.51 billion) that the country's euro area partners and the IMF expect in order to loan another 10 billion euros.

The money is needed to shore up the ailing banks and government finances.

Reports also claimed that the Cyprus government has also drawn up a new plan to raise funds need for the country to secure a crucial international bailout.

According to the report, officials said the new "Plan B" includes some Russian assistance and a smaller bank deposit tax even as the Cypriot Parliament is expected to vote on the new bill Thursday.

Cyprus Finance Minister Michalis Sarris flew to Moscow on Tuesday for meetings and said he would remain there as long as was required. Nearly a third of the total amount of deposits in Cyprus' banks is believed to be held by Russians.

With Agency Inputs

First Published: Thursday, March 21, 2013 - 22:58
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