Eurozone sends billion euros for Cyprus bailout

The eurozone on Wednesday sent a billion euros ($1.3 billion) to Cyprus as scheduled from its bailout fund, completing disbursement of the first tranche of a financial aid deal that could total up to 9.0 billion euros over three years.

The cash payment by the European Stability Mechanism (ESM) comes after an initial disbursement of 2.0 billion euros made last month also in cash as part of a rescue plan for the island agreed earlier this year, the ESM said in a statement.

The International Monetary Fund (IMF) is to contribute up to 1.0 billion euros, as part of a 10-billion-euro loan deal.

Under the deal, Cyprus has undertaken to reduce its banking sector drastically by restructuring its biggest lender, Bank of Cyprus, and liquidating the second largest, Laiki.

Deposits of more than 100,000 euros in both banks have been heavily taxed.

These unprecedented measures have been heavily criticised in the country.

Cypriot President Nicos Anastasiades earlier this month sent a letter to eurozone leaders in which he said that the terms of the bailout endangered the future of the Bank of Cyprus.

The Cypriot government later explained that Nicosia did not want to renegotiate the bailout but was asking for practical assistance in implementing it.