Eurozone finance ministers had approved a new bailout plan for Cyprus, putting an end to uncertainties over the fate of the Mediterranean island country in the euro area, the Eurogroup head said early on Monday.
Eurozone finance ministers had approved a new bailout plan for Cyprus, putting an end to uncertainties over the fate of the Mediterranean island country in the euro area, the Eurogroup head said early on Monday.
"Eurogroup has reached political agreement with the Cypriot authorities on a financial assistance program," Eurogroup President Jeroen Dijsselbloem said at a press conference after hours of tough negotiations.
"The Eurogroup welcomes the plans for restructuring the financial sector as specified in the annex. These measures will form the basis for restoring the viability of the financial sector," he said.
The program will contain a "decisive approach to addressing financial sector imbalances," and there will be "an appropriate downsizing of the financial sector," with the domestic banking sector reaching the EU average by 2018.
In addition, the Cypriot authorities have reaffirmed their commitment to stepping up efforts in the areas of fiscal consolidation, structural reforms and privatization, Dijsselbloem told the press conference.
The deal came after days of uncertainties after the Cypriot parliament rejected a former bailout deal struck on March 16, under which depositors in Cypriot banks will be hit with a one-off tax on their savings.
Under the new agreement, deposits below the EU deposit-guarantee ceiling of 100,000 euros will be all protected, Dijsselbloem, who also serves as the Dutch finance minister, told reporters.
Cyprus' ailing banking sector has been crippled by exposure to crisis-hit Greece, and international lenders had asked the Cypriot authorities to raise 5.8 billion euros (about 7.5 billion U.S. dollars) on its own before it can receive a 10 billion-euro bailout.
After the Cypriot parliament rejected a former bailout deal last week, the European Central Bank said without a deal by Monday, it would cut off emergency funds to Cypriot banks, potentially leading to the bankruptcy of the country's major lenders and even its exit from the euro.
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