Cyprus’s parliament was set to reject a divisive tax on bank deposits in a vote scheduled for Tuesday, pushing the island closer to a debt default and banking collapse, Reuters reported.
A weekend announcement that Cyprus would break with previous practice and impose a levy on bank accounts as part of a ¤10bn ($13bn) EU bailout prompted turmoil on European financial markets on Monday.
Cypriot and euro zone officials have sought to soften the initially proposed levy of 6.75 per cent on depositors of up to ¤100,000 and 9.9 per cent above ¤100,000 to ease the burden on small savers.
But passage of the bill in the 56-member chamber, where no party has a majority, was unlikely and it was not clear if the vote would even go ahead later on Tuesday if leaders were sure it would be rejected.
“It looks like it won’t pass,” Cypriot government spokesman Christos Stylianides told state radio.