Cyprus running out of cash as it waits for rescue

Panicos Demetriades’ central bank limited cash withdrawals
Panicos Demetriades’ central bank limited cash withdrawals

CYPRUS will struggle to pay its civil servants and pensions this month due to a budget shortfall of at least €75m (£63.9m), the country’s accountant general said yesterday.

Rea Georgiou told the country’s parliamentary finance committee that the government was racing to plug to funding gap until its bailout cash comes through next month.

Cyprus last month agreed a €10bn (£8.4bn) bailout deal from the European Union and International Monetary Fund.

New finance minister Haris Georgiades said at the same committee that Cyprus has no other choice but to stick to the terms of the deal, including a haircut on depositors with more than €100,000 to help recapitalise the country’s banks.

“I would like to make this clear: There is no Plan B... An exit from the euro, and I underline this, would equal a much bigger haircut not only on big depositors but on the entire economy,” he said. “The living standards of every citizen would go back decades.”

The Central Bank of Cyprus on Friday extended limits on cash movements for a further week, as account holders with more than €100,000 await the first levy on their savings, which could come within days, according to reports.

A probe into the country’s stricken banking system will be expanded to include Cyprus Popular Bank, which was nationalised last year due to its exposure to Greece, the central bank, led by Panicos Demetriades, said yesterday.

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