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Cyprus averts crisis, for now

Cyprus averts crisis, for now
Highlights

-Cyprus gets A�8.5-bn bailout from the EU -IMF chief: 'It will form a lasting, durable and fully financed solution' -Savers with more than...

cypus2 -Cyprus gets A�8.5-bn bailout from the EU -IMF chief: 'It will form a lasting, durable and fully financed solution' -Savers with more than A�85,000 will lose up to 40 per cent of their money -More than 60,000 British expats live on the island, so many face losses -Russian PM: 'The stealing of what has already been stolen continues'
Without a deal, the tiny Mediterranean island nation of about a million people would have faced the prospect of bankruptcy, which could force it to abandon the euro currency and spur turmoil in the eurozone
Cyprus has secured a huge bailout package of rescue loans after tense negotiations ended last night, saving the country from a banking system collapse and bankruptcy. The cash-strapped island nation needs a 10billion euro (A�8.5billion) bailout to recapitalise its ailing lenders and keep the government afloat. But savers with more than A�85,000 in its banks will lose up to 40 per cent of their cash as one of several draconian measures imposed by Brussels to stop the country going bust. A The island has at least 60,000 British expats and attracts investors from all over the world because of its low tax and light-touch financial regulations. There are also another 80,000 Cypriots who live in the UK but may have some of their cash invested there. Without a deal, the tiny Mediterranean island nation of about a million people would have faced the prospect of bankruptcy, which could force it to abandon the euro currency and spur turmoil in the eurozone. In return for the bailout, Cyprus must drastically shrink its outsized banking sector, cut its budget, implement structural reforms and privatise state assets. The European Central Bank had threatened to cut crucial emergency assistance to the country's banks by Tuesday without an agreement. 'We believe that this will form a lasting, durable and fully financed solution,' said IMF chief Christine Lagarde. The finance ministers of the 17-nation eurozone accepted the plan reached in 10 hours of negotiations in Brussels between Cypriot officials and the so-called troika of creditors: the International Monetary Fund, the European Commission and the ECB. Eurozone leaders maintain the country's business model of attracting foreign investors, among them many Russians, with low taxes and lax financial regulation has backfired and must be reformed.A But it has caused a row with Moscow, with The Kremlin warning they could 'punish' European businesses if the EU imposes a bank levy. Russian investors have 30billion euros in Cyprus, and would be particularly hard-hit, prompting speculation they could pull out their money. (Dailymail)
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