Cyprus secures $13 billion bailout package from Eurozone, IMF

PanARMENIAN.Net - Cash-strapped Cyprus secured a €10 billion ($13 billion) bailout package from its European partners and the International Monetary Fund in a bid to prevent the island nation from entering a bankruptcy that could rekindle the region's debt crisis, officials said early Saturday, March 16, according to AP.

In a major departure from established policies, the package foresees a one-time levy on the money held in bank accounts in Cyprus. Analysts have warned that making depositors take a hit threatens to undermine investors' confidence in other weaker eurozone economies and might possibly lead to bank runs.

In return for the rescue loans, Cyprus will trim its deficit, significantly shrink its troubled banking sector, raise taxes and privatize state assets, said the Netherlands' Jeroen Dijsselbloem, president of the Eurogroup meetings of the 17-nation eurozone's finance ministers.

"The assistance is warranted to safeguard financial stability in Cyprus and the eurozone as a whole," he said, briefing reporters after almost 10 hours of negotiations.

People with less than €100,000 in their Cypriot bank accounts will have to pay a one-time tax of 6.75 percent, those owning more money will lose 9.9 percent. The measure will be carried out early next week and is expected to net €5.8 billion in additional revenues, Dijsselbloem added, thereby greatly reducing the country's financing need.