Cyprus votes loan agreement through Parliament

Cypriot lawmakers on Tuesday narrowly approved a multi-billion-euro loan agreement with international creditors, with 29 votes in favor and 27 against, following a tense day of debate in Parliament and as hundreds of protesters rallied outside the House with officers forcing back some who sought to break a police cordon.

The vote, which was expected to be close, followed an appeal earlier in the day by President Nicos Anastasiades for MPs to support the loan agreement despite its onerous terms. “What we are being asked to do today is adopt a loan agreement which will allow our country to breathe and give us the chance to overcome whichever problems may arise in this crisis,” he said.

Earlier in the day, government spokesman Christos Stylianides had struck a similar tone in comments to state radio. “We have had enough of delusions. We don’t have any other choice,» he said. Whoever knows of one should tell us what it is.”

The first tranche of rescue funding – a 2-billion-euro instalment – is to be disbursed in mid-May with the second instalment of 1 billion euros to be paid out at the end of June. Of the 10 billion euros being lent to Nicosia, 2.5 billion euros is for bank recapitalization, 4.1 billion euros is for paying off debts and 3.4 billion euros for covering fiscal needs.

As part of its deal with the so-called troika of foreign creditors – the European Commission, European Central Bank and International Monetary Fund — Nicosia committed to closing its second-largest lender, Cyprus Popular Bank (Laiki) and imposing heavy losses on uninsured depositors in Bank of Cyprus.

The main opposition party, Communist AKEL, which had initially applied for financial support in June 2012 when it was in power, suggested in a statement issued yesterday that the terms of the final deal were so painful that leaving the euro zone might be a preferable option. «Cyprus’s only option is a solution outside the loan agreement and the Memorandum of Understanding,” it said. “Seeking such a solution is possibly tantamount to a decision to exit the euro.”

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