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World

Cyprus lawmakers narrowly reject bailout legislation outside parliament

Associated Press
Published | Updated

NICOSIA, Cyprus – Cypriot lawmakers on Tuesday narrowly rejected two pieces of legislation that the bailed-out country's international creditors demanded in return for a second, 1.5 billion euro ($1.98 billion) euro installment from a 10 billion euro loan.

Lawmakers voted 21 in favor and 23 against legislation pertaining to the supervision and reform of the country's troubled cooperative banks.

The outcome of the vote was unexpected and sowed confusion within Parliament, prompting speculation that Cyprus' 23 billion euro ($30.36 billion) financial rescue deal that it negotiated with its euro area partners and the International Monetary Fund in March would be put into jeopardy.

As part of its rescue, Cyprus in March agreed on a deal that saw deposits over 100,000 euros in its two biggest banks take major losses. Restrictions on withdrawals and transfers from banks were also imposed to prevent a run.

The legislation is a prerequisite for international creditors to release the next installment which will be used to restore cooperative banks' depleted capital buffers.

The country's ruling, center-right DISY party and its partner DIKO voted in favor while communist-rooted party AKEL socialist EDEK voted against. Also voting against was the lone Green Party lawmaker as well as two other lawmakers.

Finance Minister Harris Georgiades rushed to parliament to meet with party leaders in order to figure out what needs to happen next in order to win approval for the legislation. DISY leader Averof Neophytou appealed to lawmakers to find ways of seeing eye to eye on the legislation so it can be urgently put to a vote again and passed.

Meanwhile, several hundred protesters gathered outside the parliament earlier Tuesday to denounce the legislation they say will only fan poverty.

Demonstrators from AKEL and other left-wing groups shouted slogans and held aloft banners criticizing the country's financial rescue plan. One banner read "We won't become 21st -century slaves."