Key bills OK’d in Cyprus in bailout effort

Associated Press

NICOSIA, Cyprus

Lawmakers in Cyprus approved three key bills Friday that aim to raise enough money to qualify the country for a broader bailout package and help it avoid financial ruin in mere days.

A total of nine bills were approved, including a key one on restructuring the country’s ailing banks, which lost billions on bad Greek debt; one on restricting financial transactions in times of crisis; and one that sets up a “solidarity fund” into which investments and contributions will flow.

More bills to meet the total target of $7.5 billion Cyprus needs to secure an international bailout will be brought for a vote over the weekend.

They include a crucial one that would impose a tax of less than 1 percent on all bank deposits, said Averof Neophytou, deputy head of the governing DISY party.

“We are voting for the least-worst option,” Neophytou said in a speech. “We owe an apology to the Cypriot people because we all share in the responsibility of bringing this place to this state.”

Approval of the tax would come just days after the parliament decisively turned down a plan that would have seized up to 10 percent of people’s bank deposits. The plan triggered an outcry from people who condemned it as an unfair grab of their life savings, while politicians saw it as causing irreparable damage to the country’s financial center status.

Nonetheless, ordinary Cypriots have said they would sacrifice willingly a portion of their savings to save the country — just as long as somebody doesn’t impose it on them.

Cyprus’ president, Nicos Anastasiades, will travel to Brussels today to present the revised package to the country’s prospective creditors, its fellow countries that use the euro currency and the International Monetary Fund. There has been no indication yet that they will accept it.

Cyprus has been told to raise $7.5 billion to qualify for $12.9 billion in rescue loans from the eurozone and the IMF.

Passage of the bills allows Cypriots to breathe a little easier as the country faces a pressing Monday deadline, when the European Central Bank has said it will stop providing emergency funding to the country’s banks if a new plan is not in place.

Without the ECB’s support, Cypriot banks would collapse Tuesday, pushing the country toward bankruptcy and a potential exit from the 17-country eurozone.

But eurozone officials said they still had not seen all the details and would have to discuss whatever final plan Cyprus presents.

Government spokesman Christos Stylianides said there had been “consultations all day” with representatives of the IMF, European Central Bank and European Commission — collectively known as the troika — who monitor and vet adherence to bailout conditions.