The cost of bailing out Cyprus has swollen to €23bn (£19bn), with the crisis-hit country having to take on the lion’s share of the measures needed to avoid bankruptcy, according to a draft report by its international creditors.
The document says Cyprus must find €13bn – an increase on the €7bn contribution agreed during last month’s chaotic bailout talks. The money will be raised by imposing heavy losses on large bank deposits, levying extra taxes, privatisations and a part-sale of the central bank’s gold reserves. “The sheer size of the increase has underlined the extent of the enormous challenges facing Cyprus itself,” said Jonathan Loynes, an analyst at Capital Economics.
The Troika of international creditors – the European Commission, the European Central Bank and the International Monetary Fund – is set to grant the Mediterranean island nation a €10bn rescue package to recapitalise its shaky banking system and keep the government afloat. For its side of the deal, Cyprus was supposed to contribute €7bn to the rescue.
In the latest draft document, however, the Troika has revised the overall cost of bailing out Cyprus amid a gloomier economic outlook for the country, adding an extra €6bn to the bill.
The Cypriot government blamed the gulf between the original total and the new €23bn bill on the previous left-wing administration and the time it took to properly negotiate a bailout – delays which pushed the cost of recapitalising its banks much higher. A government spokesman, Christos Stylianides, accused former President Dimitris Christofias of failing to “take responsibility and complete indecisiveness” in promptly negotiating a bailout.