Cyprus Lawmakers Set to Approve Rescue Loan Deal Later TodayPaul Tugwell
Cyprus’s international rescue loan deal is set to be approved by a slim majority in the nation’s parliament today, with 29 lawmakers saying they’ll vote in favor and 27 against.
Cypriot President Nicos Anastasiades agreed on March 25 to a 10 billion-euro ($13.1 billion) loan from the euro area and the International Monetary Fund in return for measures including a tax on bank deposits of more than 100,000 euros at the country’s two biggest banks, wage and pension cuts and the sale of assets and gold. Those concessions were demanded by creditors in a bid to shrink what European and IMF officials called an oversized and unsustainable banking sector.
“Cyprus is going through difficult times” and the loan agreement “will help our country to breathe,” Anastasiades said today in comments televised live on state-run RIK TV as he urged lawmakers to approve the deal.
The main opposition Akel party said it will oppose Cyprus’s memorandum with the troika of the IMF, the European Commission and the European Central Bank even if rejection of the deal would trigger a Cypriot exit from the euro area.
The memorandum will lead to a “significant” loss of sovereignty and prosperity and more social misery, the Nicosia-based party said in a statement on its website, adding that the only choice for Cyprus is a solution other than the loan agreement. “The search for such a solution will most likely be linked to a decision by Cyprus to leave the economic and monetary union of the euro,” according to the statement.
An exit from the euro area with a devaluation of the local currency would not help a small, non-export oriented economy such as that of Cyprus, government spokesman Christos Stylianides said in reply to Akel’s stance, according to an e-mailed statement from the government’s press office.
A possible euro exit “would create worse problems in the financial sector inevitably leading to uncontrolled outflows at a time when the key task is stabilizing the banking sector,” Stylianides said. A euro exit would also mean an automatic exit from the European Union itself, he said.
In an indication of how the loan deal vote may go, lawmakers today approved an increase to a property tax, a requirement of international lenders, with 29 parliamentarians voting in favor, 26 against and one abstention.
Akel has 19 members in the 56-seat Cypriot parliament compared with 20 lawmakers for the Disy party of President Anastasiades that will vote yes. The EDEK party of parliament speaker Yiannakis Omirou, with five lawmakers, decided late yesterday that it would also oppose the deal as will the Green party, with one lawmaker and one independent member of parliament.
Marios Karoyian, leader of the Diko party which has eight seats and which supported Anastasiades in February’s presidential election, said in comments televised live yesterday on state-run RIK TV that his political grouping will support the loan deal as “there’s no other choice.”
Of the two remaining lawmakers, both from the European party, one will vote against the loan agreement and the other will support the accord, state-run Cyprus News Agency reported today, citing the two parliamentarians, respectively Nikos Koutsou and Dimitris Sillouris.
Cypriot lawmakers are scheduled to begin a debate on the memorandum at 3:00 p.m. local time with a vote to follow at around 7:00 p.m.