Eurozone economy and finance ministers on Saturday hammered out a bailout deal of up to 10 billion euros ($13 billion) for Cyprus, the region’s smallest economy.
Eurogroup President Jeroen Dijsselbloem said in a press conference after the meeting that the rescue package for Cypriot banks - battered by their heavy exposure to Greek government debt - includes “ambitious measures” in the area of fiscal consolidation, structural reforms and privatizations, as well as “decisive actions” to safeguard financial stability.
The Eurogroup scaled the bailout package down from an amount initially calculated at 17.5 billion euros, he said.
The European ministers required that part of the multi-billion-euro package be paid for with an extraordinary 9.9 percent tax on Cypriot bank deposits of more than 100,000 euros and 6.7 percent on deposits under than amount.
The requirement angered people on the Mediterranean island, who rushed Saturday to withdraw cash from their accounts.
Given the size of Cyprus’ banking sector relative to the country’s gross domestic product, there will be an “appropriate reduction” of its size to bring it in line with the average for the European Union by 2018, Dijsselbloem said.