Political leaders in Cyprus agreed on a new bailout plan yesterday after Europe stepped up the pressure on legislators in Nicosia to agree to a rescue package for the small euro zone member state’s troubled banks.
According to a statement issued by the office of the president, a unanimous decision by political party leaders was reached in Cyprus for the creation of an investment solidarity fund as part of the new rescue plan. No details were given.
Earlier yesterday the European Central Bank (ECB) set a deadline to sign off on a bailout by saying it would only provide emergency funds for Cyprus’s banks until Monday, thus raising the risks of a collapse of the nation’s financial sector.
After Monday “emergency liquidity assistance could only be considered if an EU or International Monetary Fund programme is in place that would ensure the solvency of the concerned banks”, the ECB said.
Following the ECB’ s ultimatum, the office of Cypriot President Nikos Anastasiades said political parties in Nicosia had agreed to a revised rescue plan.
The nation’s parliament had rejected a bailout deal agreed to at the weekend by European finance ministers, which imposed a controversial levy on bank deposits in Cyprus.
Eurogroup head Jeroen Dijsselbloem repeated that Cyprus would have to bear part of the burden of any bailout.
Analysts say that without a contribution from Cyprus, any EU-backed bailout would not pass Germany. page 21