EU refuses to ease bailout on Cyprus vote

Tim Wallace
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TOP EUROZONE officials last night held firm on their bailout offer to Cyprus, as the state’s finance minister jetted off to Russia to look for an alternative source of funds.

The country’s parliament voted decisively against the deal, which included a €10bn (£8.5bn) loan but also a €5.8bn raid on bank deposits.

The President hopes he can either gain more favourable terms from the Eurozone, or find a solution elsewhere.

But the Eurogroup last night showed no signs of changing its stance.

“I take note of the decision of the Cypriot parliament on the government’s proposal for a one-off stability levy,” said Eurogroup head Jeroen Dijsselbloem.

“I confirm that the Eurogroup stands ready to assist Cyprus in its reform efforts and reiterate the position of the Eurogroup as I stated [on Monday].”

French finance minister Pierre Moscovici backed that up, insisting the country cannot cope with a bigger loan, implying Cyprus must find the funds from elsewhere – like the proposed raid on bank deposits.

“Above €10bn we are entering into a size of debt that is not sustainable,” he argued yesterday.

Analysts at OpenEurope believe a deal must be done this week if the country is to stay in the Eurozone.

“Cyprus will run out of cash on 3 June, when it has to repay a €1.4bn international bond,” the think tank said. “However, the decision will need to be taken long before that. Cypriot banks cannot stay closed for long but they cannot be reopened until a decision is taken.”

“Otherwise there will almost certainly be a deposit run.”