Cyprus becomes fifth Eurozone member to seek bailout

26^th June 2012

Abbie Cavendish

Abbie Cavendish

26 June 2012

The Mediterranean country of Cyprus has become the fifth member of the single currency to apply to Brussels for financial assistance. Its proximity to Greece has hit its banking sector and the country is applying for assistance for both that and for its budget deficit.

The country has until June 30^th to raise 1.8billion Euros – 10% of its GDP – to reassure regulators about the health of Cyprus Popular Bank, its second largest lender.

It is thought that Cyprus attempted to secure loans from either China or Russia in order to secure its 17.3billion Euro economy – the second smallest in the Eurozone.

A spokesman for the government explained that their attempts to secure such a loan would continue, saying: “We will continue efforts to secure a bilateral loan, which can be used accordingly.” It is being speculated, however, that such a move would be fiercely unpopular in Cyprus, as EU membership is said to be a matter of national pride.

Finance Minister Vassos Shiarly has said that the country would be deciding the full amount of assistance the country would be seeking in the next few weeks.

He told Reuters: “The amount will be as much as it may be needed to cover the recapitalisation and fiscal requirements. These will be established after careful review during the next few weeks.”

The country’s financial issues come at a potentially embarrassing time for Brussels, where Cyprus will be taking the rotating presidency on July 1^st. Cyprus Parliamentary speaker Yiannakis Omirou said: “It is a tragic coincidence.”

Abbie Cavendish