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Cyprus government to draw a new plan to qualify for bailout

Cyprus' government is preparing a new strategy to raise essential capital in a bid to qualify and secure a bailout package, after the country rejected the previous tax plan on bank deposits.

The new bill, which might include seeking Russian assistance and a smaller bank deposit tax, will be presented in the parliament for voting today.

According to the EU plan, Cyprus agreed to raise €5.8bn to avoid the country’s debt from reaching unsustainable levels, while recommending confiscating up to 10% deposits of bank depositors.

In order to prevent cash crunch possibly emerging from huge withdrawals of funds by public, the country has ordered for closure of all banking operations possibly until 22 March.

The European Central Bank (ECB) has warned the Cyprus government that it will discontinue emergency liquidity offering to its two main banks in the absence of a bailout program, leading to immediate collapse of both banks.

ECB together with the International Monetary Fund and the European Union are gearing up to provide €10bn to Cyprus in bailout funding, but the country still requires an additional €7bn.