The ECB confirmed it would only guarantee assistance for Cyprus through Monday unless a new aid programme was in place – an ultimatum which spooked investors on European stock markets and led to a fall in the value of the euro.
Economy and Finance
ECB Tells Cyprus They Have To Accept Bailout By Monday
The European Central Bank has put a deadline on Cyprus accepting the bailout they have offered as the Cypriot president rushes to agree a ‘plan B’ aimed at securing a bailout.
The ECB confirmed it would only guarantee assistance for Cyprus through Monday unless a new aid programme was in place – an ultimatum which spooked investors on European stock markets and led to a fall in the value of the euro.
The chairman of the Eurogroup, made up of the eurozone nations’ finance ministers, Jeroen Dijsselbloem added to the gloom when he told the European Parliament that he believed Russia would not ride to the rescue of Cyprus.
He also told MEPs that the problems in Cyprus posed a systemic risk to the single currency area.
The near-bankrupt nation has closed its banks until Tuesday while new proposals are debated among political leaders, aimed at replacing the rejected bailout demand for a controversial tax on savings.
President Nicos Anastasiades set a deadline of Thursday for a new rescue plan to be agreed after his finance minister, Michalis Sarris, failed to make any progress on possible Russian aid during talks in Moscow on Wednesday.
Mr Sarris said today that the discussions with Russia were continuing over investment in Cypriot banks and energy resources to reduce the eurozone nation’s debt burden.
He was also seeking an extension to an existing Russian bailout loan.
The president’s proposals, which might still include the controversial bank levy in some form, could contain “the creation of a structural investment fund, reinforced by various provident funds, real estate”, government sources suggested.
They also told the official CNA news agency that the fund “will also be linked with a bond issue and natural gas prospects”.
The troika of lenders – the European Union, European Central Bank and International Monetary Fund agreed a bailout deal last Saturday on condition Cyprus raised another 5.8 billion euros through a tax on savings.
The resulting backlash has meant that banks will have been closed for 10 straight days under the crisis measures implemented to avert a run on deposits.
The move has inevitably dealt another blow to Cyprus’s debt-laden economy, which contracted by 2.3% in 2012, having taken a battering from the global financial crisis and its exposure to Greece.
“We cannot buy, we cannot sell. A lot of my customers are hotels and restaurants… and we cannot supply them.”
Said Costakis Sophoclides, the director of a frozen goods company in Nicosia.
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