Cypriot parliament passed bills to restrict withdrawal of funds from bank accounts

(RIA Novosti) - The Cypriot parliament passed bills Friday to entitle the government to restrict withdrawal of funds from bank accounts in exceptional cases and to establish a “solidarity fund.”

The legislation is aimed at finding a way for the island nation to secure a 10 billion euro ($13 billion) loan from the European Union (EU) and the International Monetary Fund (IMF). Cyprus has to find 5.8 billion euros ($7.5 billion) to receive the bailout package.

In line with another bill approved Friday, the country’s troubled lenders are to be divided into “good” and “bad” banks.

Cypriot Finance Minister Michalis Sarris flew home from the Russian capital Moscow on Friday following an unsuccessful attempt to persuade Russia to grant his country financial aid in return for investments in its national banks and gas projects.

But Russian Prime Minister Dmitry Medvedevsaid Friday Moscow is still willing to provide Cyprus with financial aid to help it overcome its economic woes, but only after the EU and the island nation work out a joint plan for its recovery.

The European Central Bank has said that unless Cyprus raises billions of dollars by Monday it could lose emergency funds and face inevitable financial collapse.

The urgency for a multibillion-dollar loan from Russia emerged after the Cypriot parliament rejected on Tuesday a levy on bank accounts that international creditors, including the EU and the IMF, had set as a condition for providing the 10-billion euro bailout for Cyprus.

Overall, Cyprus needs about 17 billion euros ($22.1 billion) in aid to shore up its budget and recapitalize its banks, which were forced to write down billions of euros in “voluntary” Greek debt restructuring.