The cost of the bailout for Cyprus has increased to 23bn euros ($30bn; £19.5bn), according to a draft document prepared by the country's creditors.

The original cost of the bailout was put at 17.5bn euros.

But the new total, disclosed in a document seen by news agencies, means Cyprus will have to find 13bn euros to secure 10bn euros from the European Union and the IMF.

Previously it was thought that Cyprus would have to raise 7.5bn euros.

Government spokesman Christos Stylianides said: "It's a fact the memorandum of November talked about 17.5bn (euros) in financing needs. And it has emerged this figure has become 23bn.

"Who is responsible for this? How did we get here? It was the fear of responsibility and indecision of the previous government," he added.

'Enormous challenges'

Analysts are now questioning if Cyprus can raise such a sum.

The winding up of one Cypriot bank, Popular, and the writing-off of a large portion of secured debt and uninsured deposits in the largest bank, Bank of Cyprus, should raise a total of 10.6bn euros.

There have also been reports that Cyprus may sell a large portion of its gold reserves in order to raise another 400m euros.

"The sheer size of the increase has underlined the extent of the enormous challenges facing Cyprus itself,'' said Jonathan Loynes of Capital Economics in an analyst note.

The Cypriot economy is only worth about 18bn euros and accounts for less than 0.2% of the eurozone total. Several analysts now think the Cypriot economy may shrink by more than 10% this year alone.

"If everything goes according to plan, the growth figures might at least be in a realistic range, if too optimistic,'' said Christoph Weil of Germany's Commerzbank.

"If there are any problems, and there are significant downside risks, then it could be much worse, and a combined contraction of 20% is within the range of the possible."

Eurozone and EU finance ministers will meet in Dublin on Friday in a bid to finalise the Cyprus bailout. They will also consider extending debt repayment dates for Portugal and Ireland.

But the meeting comes amid fresh concerns about the economic impact of political deadlock in Italy, and speculation about whether Slovenia might need a bailout.

http://www.bbc.co.uk/news/business-22106194

The tiny island is being dwarfed by its debts. The cost to rescue it has soared from 17.5 BN Euros to 23 BN.  To give perspective, Cyprus’ economy is around 18BN Euros, and when you factor in the population the bailout will cost a staggering 27,000 Euros for every man, woman and child.

So let’s discuss. What are your thoughts on this? Do you think the method employed by the Troika was best? Why or why not? Bring other elements to the discussion if you wish.

I noticed the heads of Slovenia have come out to say they won’t need a bailout. That seems to be the trend with these leaders before they require a bailout. Any thoughts here?

You’ve never heard of Cyprus? Well, to give  a crude summary .. prior to the crisis of 2008 it was seen as a very healthy economy largely because of high growth levels, sound public finances and low levels of unemployment.

Its banking sector grew rapidly in the ‘good’ times. I think the IMF valued their assets at around 835% of their GDP – that includes loans they made.

Now that you have the context, here comes the problem. Cypriot banks were heavily exposed to the situation in Greece, so they sustained heavy losses from the ‘haircuts’ and other measures that transpired in there. Basically, when Greece was allowed to defalt on some of its debts the banks in Cyprus got into serious trouble. The losses were so large that the Cypriot government couldn’t bail them out personally and that's why the Troika had to step in (the IMF, European Central Bank and European Commission). 

Now despite the relatively small size of the economy, many were concerned about that crisis spreading to the wider eurozone area. Contagion (spreading) would be very bad for the eurozone and by extension global markets. Humans and their old herd instinct. That’s one of the reasons why policy makers don’t want it to exit the eurozone area (According to Christine Lagarde from the IMF and Mario Draghi from the European Central Bank). People fear if it is not bailed out or allowed to exit the eurozone it would trigger a loss in confidence in the currency bloc and prompt all sorts of problems, such as investors withdrawing from the other troubled economies (Such as the PIGS .. Portugal, Italy, Greece, Spain)

It's seen as a '2 tier' island. One side has Greek influence while the other has Turkish influence. The Greek side is in the shitter.

Well that's true for everything greek vs turkey wise lately.

If things weren't quite as bd it'd be quite the blow to the ego.  

Cyprus just shows that being a tax haven isn't all bonuses.

If you screw up... there is no recovery really.

Here we go again! Another failed bailout! I wish this would stop

I don't see how you can be anti-bailouts considering how much you hate Thatcher.  If the Eurozone didn't bail out cyprus they would be facing measures that would make Thatcher look like Karl Marx.

I haven't see any benefits from bailing the banks or any of these countries. A bailout is like a blackhole, it just sucks up the money that could be used to invest in our weak economies. My problem with bailouts, especially EU bailouts is that strings are attached. Stuff like austerity is forced onto the people. Elected governments become puppets of the EU and Germany in particular and a downward cycle begins. Mass unemployment, falling quality of life, breakdown and disillusion of society and it just gets worse and worse. This is because of austerity, a key part of the bailout. If money from bailouts went to something which would help to fix the economy and so that countries like Cyprus don't become dependent on bailouts, I would be for it but i haven't seen the evidence for that yet. I see this only ending in revolution, especially in Greece (fascists)  and possibly Spain (splitting up of regions like Catalonia) and Italy (which can't even form a government now!)  where over 1/4 of the population is unemployed. And such countries end up borrowing so much that they end never paying it back and we know this already. It's depressing but it's like the 30's all over again. Also, as a British citizen i'm not happy to see more money go to a failed state, as i'm sure the French and Germans and others aren't either, when it could help us help ourselves first and then help them help theirselves. We need a responsible capitalist system on all sides to stop boom and bust, austerity and all the other bullshit wrong with Neo-liberal Capitalism. 

You seem to be lacking sevre perspective here.  Lets start off with the bolded because it's where hypocricy is at it's highest.  Britain used to be one of those failed states that needed bailout money.  Who took over and "helped themselves" and stopped England from needing constant IMF bailouts?

Margret Thatcher.   What she did is exactly how a nation helps itself out of being a failed state economically.  You deride England for having to go through it instead of being  bailed out, and yet want other countries to go through that without getting YOUR money?  Austerity is how you get out of faied state status when your failing is "we don't have enough money to buy what we are buying."  

The result of "No Bailout" is "Austerity greater then what would of happened under a bailout."

Additionaly... Boom and Bust isn't a part of Neo-Liberal Capitalism...   Neo-Liberal Capitalism actually focuses on ways to STOP the Boom and the Bust by setting down simple unchanging rules in a market place that do not change and preventing extremely low interest rates.  Therefore preventing bubbles from occuring by preventing the shifts in value in markets caused by price distortion and by creating a bunch of "free" money used to cause booms.  

Stimulus economics is the economics of boom and bust.  Specifically that we should allow booms from which we save (which governments never do be that conservative or liberal) and use that boom to pay off the future bust.   On the logic that the economic growth we get now, will give us more then enough savings to pay off future issues.   Except government never does save... and instead redoubles it's money in the economy... as do people.  Leading to the bust wiping out all the money meant to pay for it.

Now as for Cyprus in particular... Their banking system is 8 times the size of their GDP .   How exactly do you expect Cyprus to stimulate their way out of that?  Essentially they're entire economy would be destroyed and it would be impossible for anybody to get loans.

They'd probably have to print MASSIVE amounts of money just to make sure the average Cyrpiot citizen doesn't lose all of their money when the banks collapse. (Since these were basically the only banks the average citizen uses.)

So Cyprus without a bailout would become a country with no banks, where everybody has at most 100,000 euro in savings... where NOBODY could get a loan, and where the government would either have to cut social services down to nothing... or run deficits that would quickly eclipse GDP.

Which means they would cause a lot of inflation in their currency.

Which by the way... is the Euro.  So... no, I don't think those other countries would agree with you.  Since there money would be losing value anyway.  The difference however is...  inflation will hit EVERYONE in Europe even those too poor to pay taxes.

Big countries can afford their banks to fail.  Medium countries can afford to let their banks fail.  Tiny nations who baically rely on their banking networks for their economy?   They NEED bailouts, or they'll be forced into third world level austerity.

I can see there isn't a simply solution but we have tried this austerity for 5 years and nothing has improved. I see only investment as a way out of this. Something, people won't do because of falling credit in many countries like Cyprus and Greece, it's just a cycle of decline and complete choas. You could say Iceland is small country, as only 300,000 live there but that let it's banks collapse in 2008 and yet today would you believe, it's growing... albeit, not much but more than america or europe. 

As for the Euro, that was always going to be a failure, i don't lnow how they expect 13 or so countries with huge differences in economy and economic interests to share the same currency, it's crazy. I'm glad the UK never joined the currency. It would only work if there was a superstate in the Eurozone, not separate countries.

As for boom and bust, it must stop. Thats all i can say

Who cares about Cyprus and the bailout? What is 23 billion to the EU?