Cyprus rejects deposits haircut

CNC report from Nicosia
Added On March 20, 2013

Cyprus's parliament has overwhelmingly rejected a proposed levy on bank deposits as a condition for a European bailout.

The move has plunged the eastern Mediterranean island into economic uncertainty verging on default.

No one in the 56 member chamber voted for the levy legislation.

There were 36 votes against, and 19 abstentions.

Approval of the bill, along with another increasing corporate tax from 10 percent to 12.5 percent, was a condition of the bailout.

Cyprus is seeking 10 billion euros from the Eurogroup and the International Monetary Fund.

The Cypriot government earlier revised the proposal to exempt a levy on depositors with savings under 20,000 euros

However, the measure did not convince opposition parties nor the junior government coalition "DIKO" party.

Parliament's decision was greeted by hundreds of demonstrators who'd gathered in a nearby square to urge deputies to reject the bill.

President Nicos Anastasiades has not yet commented.

The Dutch Finance Minister, Jeroen Dijsselbloem, who chairs the Eurogroup of finance ministers, said the bloc "deeply regretted" the vote.

But he said the bailout offer still stands if the conditions are met.

Cyprus is the fifth country in the eurozone to ask for a bailout, and the first to dip into people's savings to finance the rescue loan.