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February 28, 2021

Cyprus bailout: Parliament postpones debate

The president has said that refusing the bailout would lead to the collapse of the country’s banks.

Cyprus’s parliament has postponed an emergency session on a controversial bailout deal for the country’s banks, the BBC reports. The debate and a presidential address were to happen on Sunday but will now take place today, state media said.  The deal reached with the EU and IMF on Friday has provoked public anger because it would impose a levy on bank deposits of up to 10 percent. The president has said that refusing the bailout would lead to the collapse of the country’s banks. Worried investors have been queuing outside banks to withdraw their savings from cash machines.  The 10bn-euro deal agreed by the EU and IMF marks a radical departure from previous international aid packages.  Under its terms, people in Cyprus with less than 100,000 euros in their accounts would have to pay a one-time tax of 6.75 percent. Those with sums over that threshold would pay 9.9 percent in tax. On Saturday President Nicos Anastasiades admitted the deal was “painful” but said it was necessary to avoid a “disorderly bankruptcy”. But opposition leaders and savers – including many non-Cypriots – have expressed shock and anger at the proposal. The deal has caused anger within the European Parliament. Sharon Bowles, who chairs its Economic and Monetary Affairs Committee, said: “This grabbing of ordinary depositors’s money is billed as a tax so as to try and circumvent the EU’s deposit guarantee laws. It robs smaller investors of the protection they were promised. “If it goes ahead, the levy will affect many non-Cypriots with bank accounts, including UK expatriates.  However, depositors in the overseas arms of Cypriot banks will not be hit. Bank of Cyprus UK and Laiki Bank UK both confirmed on their websites that there would be no impact.  Chancellor George Osborne said the UK would compensate any government employees and military personnel whose bank accounts were affected. Almost half of the depositors in Cyprus are believed to be non-resident Russians. The EU decision to impose a levy on bank deposits may have been motivated by a belief that a lot of the money in Cypriot banks belongs to Russian money-launderers.

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