Cyprus Debt Grows, EU Refuses Further Help
Eurozone finance ministers will meet today in Dublin. Topping their discussion will be the Cyprus debt cost which has risen dramatically since the Cyprus bailout talks began. The new cost of the bailout crisis has risen from an original 17.5 billion euros to a new figure of 23 billion euros according to the Cypriot government.
Cyprus which has now slackened the capital controls on their banking as of yesterday for local depositors will now have to find a further 3 billion euros themselves. This comes as the Finance Minister of Luxembourg Luc Freiden claims that the EU will not raise their agreed share of the bailout sum of 10 billion euros.
The Cypriot government who are looking for alternatives to raised the extra capital have mentioned that they may have to sell some of their gold reserves. This new figure brings dramatic new challenges to the Cypriot government. Cypriot depositors who have savings over the 100,000 euro threshold will still be taxed on their savings. The banking sector in Cyprus is contracting heavily as a result of the debt and many thousands of jobs are being lost in the tiny nation. Capital controls which have been suffocating small local businesses that have been unable to pay suppliers have been loosened. Now daily transactions limit has been raised from 5000EUR to 20,000 EUR although the daily limit for withdrawing funds is still 300 EUR.
Other matters for discussion at the EU meeting today include extending the repayment period for Ireland and Portugal. Also Slovenia will be discussed as their economic problems worsen.