British taxpayers to fork out €45m to rescue Cyprus

British taxpayers will have to pay €45m (£38.2m) as part of a deal struck by European leaders to rescue Cyprus, as a new finance minister was sworn in amid warnings that there would be “difficult days ahead” for the country.

By Szu Ping Chan

Christine Lagarde, managing director of the International Monetary Fund, said that the €10bn rescue hammered out between Cyprus and the so-called troika of the European Commission, ECB and IMF would help to “restore the health of the economy”.

The IMF has agreed to contribute €1bn towards the country’s bail-out via a three year loan, of which Britain is liable for 4.51pc.

Ms Lagarde said that the deal would also help the country to restructure its bloated banking sector. She added that protecting customers with deposits of less than €100,000 in the country’s stricken banks was an “important” part of the deal. “Insured depositors (representing over 95 percent of the total number of account-holders in the two affected banks) have been fully protected,” she said.

The Treasury has already flown more than £10m in cash to Cyprus to ensure that British troops and their families stationed in the country have had access to funds amid the financial chaos.

Britain’s new banking watchdog, the Prudential Regulation Authority, brokered a deal this week to rescue 15,000 savers’ deposits held by ailing Cypriot lender Laiki by transferring them to Britain.

Britain and France are the joint fourth biggest financial contributors to the IMF’s rescue fund. However, both countries’ contributions are dwarfed by the United States, which will pay €177m towards Cyprus’s rescue.
Japan, the fund’s second largest contributor, will pay €65.6m, while Germany’s €61.2m share will come in addition to its loans via the EU. The funds are expected to be approved by the IMF’s board in early May.
Cypriot president Nicos Anastasiades warned on Wednesday of “difficult days ahead” as he swore in new finance minister Haris Georgiades.
Mr Georgiades, a 40-year-old Reading University graduate, said that Cyprus would meet all the terms of its bail-out. “We shall meet all timeframes, we will meet all targets,” he said yesterday.
Former finance minister Michalis Sarris stepped down this week amid an investigation into how the island was pushed to the verge of bankruptcy.
Mr Sarris, who spent just five weeks in office, quit immediately after talks to iron out details of the island’s bail-out concluded on Tuesday.
http://www.telegraph.co.uk/finance/financialcrisis/9968675/British-taxpayers-to-fork-out-45m-to-rescue-Cyprus.html