Cyprus's government has again postponed a crucial parliamentary vote on a controversial levy on bank deposits that the cash-strapped country's creditors have demanded in exchange for a €10-billion ($13 billion) rescue package.
Yiannakis Omirou, the speaker of parliament, said Monday the one-day delay is needed to give the government time to amend an international bailout deal agreed on last week. Politicians had already postponed the vote over the weekend.
The uncertainty triggered by the crisis has already sent ripples through global markets early Monday.
In the Cypriot capital Nicosia, police cordoned off the road in front of the parliament on Monday amid heightened security to prevent any protesters from approaching the building.
Many lawmakers have said they would vote down the 6.75% levy on all bank deposits under €100,000 and 9.9% on everything above. President Nicos Anastasiades has warned that rejection would mean Cyprus' bankruptcy and a possible exit from the euro.
But Cypriot officials are trying to reduce the levy for small savers as much as possible with a corresponding rise for deposits of over €100,000.
The stakes are high for the tiny island nation of one million people, because a rejection of the levy by lawmakers could push Cyprus into bankruptcy and possibly out of the common euro currency. Officials also fear a massive run Tuesday on Cypriot banks — after a national holiday on Monday — no matter which way the voting goes.
The decision by Cyprus' 16 euro-zone partners and the International Monetary Fund to impose a one-time tax of 6.75% on all deposits under €100,000 and 9.9% over that amount has enraged Cypriot politicians, who have condemned it as unfair and disastrous. That brings into sharp doubt its approval in the 56-seat parliament.
These events mark the first time that the IMF and the 17 euro-zone nations have dipped into people's savings to finance a bailout, a move that analysts worry may roil international markets and jeopardize Europe's fragile economy.
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