Cyprus has agreed to a set of measures that will release a 10bn-euro ($12.8bn) international bailout. The International Monetary Fund (IMF), which is contributing 1bn euros, says they are "challenging" and will require "great efforts" from its population.
They will mean a doubling of taxes on interest income to 30% and a rise in corporation tax from 10% to 12.5%, BBC News reports.
The plan, designed to stabilize the banking system and government finances, was agreed in principle last week.
Cyprus's new finance minister Harris Georgiades, speaking on his first day in the post, said he was determined to honor the country's commitments: "The responsibility is great, and the expectations of our citizens greater. Our promise is that we will make every effort for what is best for the nation. Under your guidance I am sure we will succeed."
His appointment followed the resignation of Michalis Sarris on Tuesday, April 2.
The plans for the two largest banks, Bank of Cyprus and Laiki, are especially controversial in Cyprus, as they will involve heavy losses for depositors with large balances in their accounts.
The IMF, which is providing 10% of the bailout money, said 95% of account holders would be protected.
The majority of accounts have less than 100,000 euros in them, which will not be affected. However, depositors with more than 100,000 euros will lose some of their savings. Although the exact amount has still not been decided, reports have said they could lose up to 60%.
Cyprus agreed last week to shut down Laiki and transfer deposits of under 100,000 euros to Bank of Cyprus.
Restrictions on the amount of money that can be withdrawn daily are still in place.
At present, there is a daily cash withdrawal limit of 300 euros and a cap of 1,000 euros on the amount that can be taken out of the country.
Georgiades said the restrictions would be lifted “gradually'.'
The IMF's managing director, Christine Lagarde, said the country would need to pull together: "This is a challenging program that will require great efforts from the Cypriot population."
She added that its aim was to spread the pain, and "seek to distribute the burden of the adjustment fairly among the various segments of the population and to protect the most vulnerable groups".
