EUROZONE finance ministers have sewn up an agreement that will see the International Monetary Fund and European Union hand €10bn (£8.5bn) to the country as part of a €23bn rescue package for the stricken country.
Following the news, the focus switched to Slovenia, the next country to risk needing a rescue package. The country’s 10-year bond yields today rose perilously close to the seven per cent level perceived as making a country’s finances unsustainable, but the Slovenian Prime Minister said her government would sell off a number of state assets to avoid drastic measures.
The Cypriot agreement, reached in the early afternoon, came after the cost of the country’s bailout rose from €17.5bn to €23bn, which stoked suggestions that Cypriot President Nicos Anastasiades would ask for more money.
However, the collection of finance ministers – known as the Eurogroup – today said that increasing the size of other countries’ loans from €10bn had not been on the table, and the group’s head, Dutch finance minister Jeroen Dijsselbloem said there would be pressure on Cyprus to sell off its gold reserves to fund the bailout.
“The Eurogroup notes with satisfaction that the Cypriot authorities have implemented decisive bank resolution, restructuring and recapitalisation measures to address the fragile and unique situation of Cyprus’ financial sector,” a statement from the group said.
These measures are believed to include raising corporate tax and capital gains rates.
The country’s banking sector ground to a halt last month, but re-opened after strict capital controls were introduced.