ECONOMY

Tax on Cypriot bank depositors gets closer

International lenders are aiming to give Cyprus a bailout of close to 10 billion euros, less than initially expected, with taxes imposed on Cypriot bank depositors likely to fill the gap, officials said on Friday. Eurozone finance ministers met on Friday along with IMF chief Christine Lagarde to discuss the bailout, mainly needed to recapitalize the Mediterranean island’s banks, which were hit hard by a sovereign debt restructuring in Greece last year.

The package is likely to contain a mixture of tax increases, one-off revenue-raising measures, plans for privatizations and an overhaul of the banking sector to ensure Cypriot debt is sustainable and Nicosia can pay back what it borrows.

Russia could help finance the program by extending a 2.5-billion-euro loan already made to Cyprus by five years to 2021 and potentially reducing the interest rate, which is now at 4.5 percent, officials have said.

Germany’s Chancellor Angela Merkel underscored the priority that was being given to solving the country’s problems at a news conference after a meeting of European Union leaders.

“To leave Cyprus up to it own devices and simply see what happens would not be responsible, in my view,” Merkel said.

[Reuters]