Cypriot lawmakers will meet on Friday to debate new legislation to prevent a financial collapse in Cyprus while Cypriots nervously withdraw as much money as they can from their ATM bank accounts, preparing for the worse.
Lawmakers will also determine the fate of Cyprus Popular (Laiki Bank), the country’s second largest bank, which suffered the most from its exposure to bad Greek debt.
Cyprus Popular is expected to be restructured before an alternative financial plan is officially approved to generate € 5.8 billion ($7.6 billion), a prerequisite of an international rescue package from the troika valued at €10 billion ($13 billion) in bailout rescue money that will recapitalize Cyprus’ banking institutions and pay down the country’s debt.
Cypriot lawmakers are working to assure their international lenders that they remain committed to restructure Cyprus Popular (Laiki Bank) before the small Mediterranean country loses its funding from the the European Central Bank, which has kept Cyprus’s banks operational with a liquidity lifeline.
The European Central Bank gave Cypriot lawmakers until Monday March 25 to raise the € 5.8 billion ($7.6 billion) it needs to secure an international bailout which comes on the heels of Cyprus’ Parliament unanimously rejecting an unprecedented one time tax of 6.75 percent on all bank deposits under €100,000 and 9.9 percent over that amount.
Cypriot Finance Minister Michael Sarris recently left his hotel in Moscow without receiving the € 5 billion in funds that Cyprus was hoping to receive from Russia.
However, Russia has agreed to approve an extension of their five year existing loan of €2.5 billion that matures in 2016 and carries a 4.5 percent interest rate.
“I think the loan will be extended and the conditions adjusted,” Sarris said before leaving Moscow.