The Cypriot Parliament has approved with only a small majority the conditions set by the Troika for the EUR10bn bailout loan and has passed legislation which will see the introduction of a “bail-in” on uninsured bank deposits of more than EUR100,000 held in the two largest banks in the country, and will also increase property tax rates.

Furthermore the Parliament has recently approved a rise in corporation tax to 12.5%, for all companies (including offshore companies) and the doubling of bank deposit interest to 30%. However, Cypriot President Nicos Anastasiades has spoken of the possibility of corporate tax breaks for businesses that reinvest in the island’s economy.

Other measures approved include public sector pay cuts, and the absorption of the bank Laiki into the Bank of Cyprus.

The approval of the bailout deal, by a mere two votes, was welcomed by the Cypriot Government. Spokesman Christos Stylianides issued a statement calling it “the responsible decision” in the face of an “unprecedented economic crisis.”

He added: “The Government will dedicate itself to the implementation of the Memorandum and the country’s continuing presence in the EU and the eurozone. In this effort we want to have with us the entire political leadership, both those who voted in favor of the loan agreement and those who voted against it because Cyprus’s salvation stands above everything else.”

On April 17, the European Commission identified “poor practices of risk management” in the banking sector as the cause of the crisis. It also announced that a new Support Group for Cyprus was being established to facilitate the implementation of the adjustment process.