Cyprus delays EU bailout debate as MPs baulk at terms

NICOSIA (AFP) - Cyprus postponed an emergency debate in Parliament on a controversial EU bailout on Sunday, threatening a prolonged closure of the island's banks as MPs baulk at an unprecedented tax on savings.

Fellow euro zone countries and international creditors imposed the deeply unpopular levy of up to 9.9 per cent on all deposits in the island's banks as a condition for a desperately needed 10 billion-euro (S$16.3 billion) bailout.

Conservative President Nicos Anastasiades needs to get the legislation ratifying the deal through Parliament before banks reopen or face a run on accounts. But Cyprus media reported that the scale of revolt against the agreement among MPs has thrown into disarray his efforts to do so over a three-day holiday weekend, and he may have to declare an additional bank holiday on Tuesday.

Negotiations are under way with the central bank to keep branches closed for an extra day, despite the potential economic cost, the privately run Sigma TV reported.

MS Anastasiades is struggling to secure even a simple majority for the terms of the bailout in the 56-member Parliament in which his conservative DISY PARTY holds just 20 seats, the channel said.

State television said the government had decided to postpone the debate to "ensure MPs were fully aware of the situation and were better informed".

The debt rescue package, agreed in Brussels early on Saturday after some 10 hours of talks, is significantly less than the 17 billion euros Cyprus had initially sought. Most of the balance is to be made up through the bank deposit levy, which will hit even balances of less than 100,000 euros with a 6.75 per cent deduction.

Cyprus bank customers voiced dismay that they alone of the five euro zone member countries forced to seek bailouts so far were being expected to help foot the bill.

"Many countries have economic problems more than Cyprus. Why are they doing this only in Cyprus?" lamented dentist Andreas Hadgigeorghiou.

There was also anger that the President had signed up to the levy after months of assurances that it was a red line he would never cross.

"I feel betrayed," a public sector employee who gave her name only as Elpida told AFP.