Cyprus bailout: update 24th March 2013

By tomorrow (Monday 25th March 2013) Cyprus has to raise €5.8 billion and come to an agreement with TROIKA in order to receive the €10 billion EU bailout. In the event that an agreement hasn't been reached, there is a strong possibility that the European Central Bank with cut its current funding to the banks here and the economy will collapse. 

While they rejected the initial levy on bank depositors on Tuesday, it seems after much talking, a bank levy of some sort might be back on the table. Which kind of annoys me, since this option was already overwhelming (and hastily if you ask me) rejected by the government and the majority of the people, when clearly it was a good route to go down.  

I know the levy on all bank depositors is harsh, but in this situation, everyone has to contribute to the recovery of the economy and the country. Now it's been reported that the levy on depositors is an option again, but this time it could be as much as 20% for deposits over €100,000 in the Bank of Cyprus and a 4% on the same amount at other banks. 

Along with a host of other legislative measures that the government has been frantically discussing over the past few days, is the restructuring/effective closure of Laiki bank. 

Which people are extremely angry about; it would mean the loss of money and jobs, a situation the Cypriots do not accept lightly. But I honestly don't know what other options there are. 

The situation is so bad that every single person who lives in Cyprus is going to suffer one way or another. But people in Cyprus have lived a very nice lifestyle for a very long time, without asking any questions; civil servants have bloated pay packets and ridiculous benefits, the banking sector is obviously flawed, the expat community reaps the benefits of life here and the island is the Russians sunshine playground. 

source

Today Mr President has jetted off to Brussels for more talks and to present the governments plan in the hope of sealing the bailout Cyprus so desperately requires. With banks closed for nearly a week and many businesses only accepting cash payments, the situation is as serious as it gets. 

Tonight we should know whether tomorrow will be the day the Cypriot economy collapsed or was saved at the final hour. 

But as Olli Rehn, EU comissioner for economic affairs has said, there are only hard choices left. 

"It is essential that an agreement is reached by the eurogroup on Sunday evening. This agreement then needs to be swiftly implemented by Cyprus and its eurozone partners.

"Unfortunately the events of recent days have led to a situation where there are no longer any optimal solutions available," he added. Source.

A week after the gravity of this situation became truly apparent, I really hope tonight sees a bailout agreement for Cyprus; I hate to think of the alternative situation.