The troubled island nation of Cyprus is running out of time to secure a bailout form it’s eurozone partners this weekend. If it fails to secure the bailout the nation will default on it’s debts, and will go bankrupt. Cyprus needs to raise 5.8 billion euros ($7.5 billion) in order to secure 10 billion euros in loans form the eurozone.
Lawmakers in Nicosia have rejected a plan to raise part of the 5.8 billion euros ($7.5 billion), by taxing private bank accounts. The banks in Cyprus have been closed all week, and the ECB has told Cyprus to keep them closed until Tuesday, in order to prevent a run on the banks. However, Cypriots have spent the week queuing at ATMS to withdraw as much of their money as possible, fearful of what the government may do.
The European Central Bank has told Cyprus they will not continue to provide emergency funding past Monday, if a plan is not in place to secure the 5.8 billion euros.
The uncertainty has caused stock markets to fall throughout Europe. Russia has been angered by the prospect of bank accounts being taxed, as Cyprus is a favourite place for Russians to do business. However, Germans will be unwilling to be seen to bail out wealthy Russian oligarchs. Cyprus and Russia currently do $¼ trillion of business annually, and Cyprus has debt repayments of $53 billion annually to Moscow. The close business ties between the two nations has led many to speculate that Russia will offer to bailout Cyprus, if Europe will not.
Lawmakers are looking at ways to restructure the countries ailing banks. It looks likely that Laiki Bank will close, with it’s assets moved to other banks. Laiki Bank has suffered heavy loses due to it’s exposure to the Greek debt crisis.
Read More: France 24
