The cost of bailing out Cyprus has risen to €23bn (£19.6bn), leaked papers show, leaving the country’s government will the task of finding an additional €6bn.
A draft of the updated rescue plan, which surfaced late on Wednesday night, shows the total bill for the bailout has risen from the €17bn estimated when the deal was agreed one month ago.
The Cypriot government originally had to contribute €7bn to the bailout, leading to the controversial decision to impose losses on savers at the country’s two largest banks.
However, the latest “debt sustainability analysis” of the country suggests it will have to raise another €6bn through its taxpayers and depositors, as the eurozone and the International Monetary Fund will only contribute €10bn.
At €23bn, the bailout package is larger than the Cypriot economy while Cyprus’ €13bn contribution is equivalent to 80 per cent of GDP.
Capital Economics chief European economist Jonathan Loynes says: “The dramatic increase in the size of the proposed rescue package for Cyprus both underlines the depth of the problems facing the country and poses further questions over the likely impact of future euro-zone bailouts on both depositors and bondholders.”
Eurozone finance ministers will meet in Dublin today to discuss how Cyprus can raise its contribution to the bailout. Luxembourg finance minister Luc Frieden has ruled out an increase in the eurozone and IMF contribution of €10bn.