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Cyprus crisis deepens as rescue cost rises by €6bn

THE financial crisis ravaging Cyprus deepened yesterday after the cost of the country's bailout surged from €17.5bn to €23bn – larger than the size of the country's economy.

Cyprus will have to find an extra €6bn to contribute to its own bailout, less than a month after the original EU-IMF deal was agreed, putting the already teetering economy in danger of collapse.

It also emerged that the government in Nicosia has agreed to sell gold reserves to raise around €400m to help finance its part of its own bailout.

The Cypriot developments came as Portugal was disclosed to be facing a second bailout.

The cost of the increased demands on Cyprus emerged in a draft document prepared by the country's creditors. Cyprus is now having to find €13bn to secure €10bn from the EU and the IMF. Previously it was thought that Cyprus would only have to raise €7.5bn.

Meanwhile, leaked documents yesterday brought the focus back on to Portugal.

Currently, the country will owe the EU and IMF €78bn in bailout loans when it has to return to the financial markets for financing in July next year.

But the documents showed that this will be nigh on impossible because Portugal will need to borrow €14.1bn in 2014, up 30pc more annually than before the bailout, at higher interest costs than those that caused its initial crisis in 2011. (© Daily Telegraph, London)

Irish Independent