1 May 2013

EU bailout provisions accepted by Cyprus

5:26 am on 1 May 2013

Parliament in Cyprus has approved a European Union bailout including provisions to impose substantial losses on bank depositors and wind down one of the island's biggest banks.

MPs voted in favour the loan package by 29 votes to 27 on Tuesday.

The government had warned that without approval the economy was in imminent danger of default.

Cyprus has secured a loan package worth 10bn euros from the European Union, the European Central Bank and the International Monetary Fund. In return it must raise 13 billion euros, largely banking reform.

The first disbursement is expected in May.

Under the bailout, depositors will be forced to take major losses on savings over 100,000 euros. Capital controls were imposed in March.

The total cost of the deal to Cyprus has risen from an original 17.5 billion euros to 23 billion, including the 10 billion euro loan from the troika.