Cyprus’ bailout deal is reached

A €10billion deal has been approved by the EU to bail the country out

12:29 25 March 2013

PUBLISHED 15:14 18 March 2013 UPDATED 20 MARCH 2013 UPDATED 25 March 2013

 

Following discussions in Brussels, a bailout deal has been reached over Cyprus’ current economic state. The country will receive the €10billion amount as granted by the EU. The news comes after at least 11 hours of deliberating over the matter.

 

This offers a solution, after previous attempts to do so failed to find an answer to the problem. This relates to a vote which was held in the country that went against a levy on particular savings.

 

Although ministers previously voted “no” - so that savings under €100,000 would not be touched by a one-off tax - now deposits over that amount will be hit.

 

The deal has meant that the Laiki, or Popular Bank of Cyprus, will be split in order to help raise funds. This bank is the top two for Cyprus’ largest banks. The fact that a deal has been reached will mean that Cyprus will not have to exit the Eurozone.

 

In a statement, the Eurogroup has said: “The programme will address the exceptional challenges that Cyprus is facing and restore the viability of the financial sector, with the view of restoring sustainable growth and sound public finances over the coming years.”

 

Adding that Cyprus has said they will take certain actions, including “the increase of the withholding tax on capital income and of the statutory corporate income tax rate”.

It is unclear as to when the banks in Cyprus, which have been closed for the last week, will reopen. Although, there has been speculation in some media

 

reports that they may open on Tuesday, 26^th March, although this is not known as of time of press.

 

President Anastasiades was elected in his post last month, in February.