The Parliament of Cyprus on Tuesday rejected a bill aimed at charging levies on bank deposits, jeopardising the country's chances of securing a desperately needed international bailout.
The bill envisioned a levy of 6.75 per cent on deposits of less than 100,000 euros ($128,950) and of 9.9 per cent on larger deposits.
The proposal, an attempt to boost the government's coffers, provoked intense anger among the Cypriot population and foreign account-holders based abroad.
Thirty-six deputies in the 56-seat Parliament voted against the bill, while 19 abstained. None voted in support.
The rejection now leaves Cyprus closer to effective bankruptcy.
Consultations will now be held with the president on finding another solution to the crisis that some fear could send the nation of 1.1 million tumbling out of the Eurozone.
International creditors in Eurozone countries and the International Monetary Fund (IMF) said their 10 billion euro ($13 billion) rescue package for debt-laden Cyprus was contingent on the one-off deposit levy, which stood to yield some 5.8 billion euros ($7.5 billion) in revenues for the Cyprus budget.
Those plans incited an angry response on Monday from Russian President Vladimir Putin, who called the move "unfair, unprofessional and dangerous". Russian Prime Minister Dmitry Medvedev compared the measure to "a confiscation of someone else's money".
With inputs from IANS