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Published On: Wed, Mar 20th, 2013

Vote kills Cyprus tax plan, collapse appears evident as EU deal appears elusive

Cyprus appears to be on the brink of bankruptcy and the proposed tax on every single bank deposits was quickly rejected on Tuesday. European creditors, who are insisting that the island contribute to its rescue package, will battle with central banks on an alternative proposal.

Cyrpus banks remained closed as a financial deal is still pending   photo Tco03displays

Cyrpus banks remained closed as a financial deal is still pending photo Tco03displays

Banks are set to reopen on Thursday and Government spokesman Christos Stylianides said a meeting was underway at the central bank to discuss a ‘Plan B’ for raising funds, but also for reducing the €5.8 billion (£5 billion) that must be found domestically.

Officials say it is just a matter of weeks before the government runs out of money, leaving it unable to cover civil servants’ salaries or welfare payments.

Underlining the sense of panic, the British Government announced that it was sending a Royal Air Force plane loaded with €1m to provide emergency loans to British troops, as banks on the island remained closed and cash machines ran out of money.

In order to qualify for €10bn promised by the International Monetary Fund (IMF), the European Central Bank (ECB) and eurozone finance ministers, Cyprus had to approve yesterday’s plan.

President Nicos Anastasiades had warned that a “no” vote could lead to financial chaos and an eventual exit from the single currency.

“At the moment the issue is if and how banks will reopen tomorrow. Capital restrictions being considered,” the anonymous official said in a text message to Reuters.

The move would attempt to address concerns that money could flood out of the country when banks do finally repoen.

The Cypriot government is now faced with a tough choice – return to the troika and try and renegotiate the terms of the bailout, or attempt to find other sources of finance, possibly from Russia.

 

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About the Author

- Writer and Co-Founder of The Global Dispatch, Brandon has been covering news, offering commentary for years, beginning professionally in 2003 on Crazed Fanboy before expanding into other blogs and sites. Appearing on several radio shows, Brandon has hosted Dispatch Radio, written his first novel (The Rise of the Templar) and completed the three years Global University program in Ministerial Studies to be a pastor. To Contact Brandon email [email protected] ATTN: BRANDON

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