Cyprus president tries to amend bailout plan

Published on NewsOK Modified: March 17, 2013 at 5:54 pm •  Published: March 17, 2013
Advertisement
;

NICOSIA, Cyprus (AP) — Cyprus' president said Sunday that he is trying to amend a key provision of an unpopular eurozone bailout plan that would tax deposits in the country's banks to reduce its effect on small savers.

But in a nationally televised speech, President Nicos Anastasiades also urged lawmakers to approve the tax in a vote Monday, saying it is essential to save the country from bankruptcy.

About 25 lawmakers from the communist-rooted AKEL party, the socialist EDEK and the Greens said they won't vote for the tax in the 56-seat Cypriot parliament amid deep resentment over a move some called disastrous. If Parliament rejects the tax, that would put the entire aid package in jeopardy.

The vote was initially set for Sunday but was postponed until Monday — a national holiday in Cyprus. On Saturday frightened savers rushed to automated teller machines to withdraw as much of their cash as they could. Cypriot officials have expressed fears of a fully-fledged bank run once lenders reopen their doors on Tuesday.

The announcement of the vote postponement set off an immediate scramble among top European financial officials. One lawmaker told The Associated Press that European Central Bank was pressuring Cypriot authorities to hold the vote without delay.

"I completely share the unpleasant sentiment that this difficult and onerous decision has caused," Anastasiades said. "That's why I continue to give battle so that the decisions of the eurozone are amended in the next hours to limit the effect on small depositors."

In exchange for €10 billion ($13 billion) in rescue money, creditors would impose a one-time tax of 6.75 percent on all bank deposits under €100,000 ($131,000) and 9.9 percent over that amount.

A senior government official said it wants to reduce the tax on bank deposits under €100,000, with a corresponding increase in the tax on deposits over that amount. The official spoke on condition of anonymity because of the sensitivity of the talks.

The deposit tax is part of a bailout agreement reached early Saturday after talks by finance ministers from euro countries and representatives of the International Monetary Fund and the European Central Bank.

The Cypriot bailout follows those for Greece, Portugal, Ireland and the Spanish banking sector, and it is the first one that dips into people's savings to finance a bailout. Analysts worry the move could roil international markets and jeopardize Europe's fragile economies.

Officials in Spain and Italy tried over the weekend to reassure their citizens by saying the situation in Cyprus is unique, and that bank deposits in their countries will remain safe.



Trending Now


AROUND THE WEB

  1. 1
    Oklahoma State's Justin Gilbert signs his rookie contract with the Cleveland Browns
  2. 2
    Kevin Durant asks for your basketball videos in Summer is Serious 2
  3. 3
    Big 12 basketball: Time, TV listing announced for Sooners' December game against Washington
  4. 4
    Lawsuit: 'Duck Dynasty' stole 'camo' idea
  5. 5
    Here's What Gaza Explosions Look Like From Space
+ show more