Cyprus MPs slash benefit spending to woo creditors

In a show of hands, MPs rushed through 23 pieces of legislation tabled by the government, which included a cull of family benefits to cutbacks on student benefits and benefits to the disabled.

As lawmakers deliberated, hundreds of individuals affected by the cutbacks converged outside parliament shouting "bin the bills of shame" and "hands off our children".

Isolated scuffles broke out when some individuals attempted to enter parliament and others threw eggs and stones at the building. There were no arrests.

Cypriots are generally reserved in nature and do not have a tradition of street protests, unlike their cousins in neighbouring Greece.

Recent demonstrations however have shown the cutbacks have hit a raw nerve; police said it would be increasing security around government buildings following a spate of protests in recent days.

Parliament is opposition-controlled, but normally fractious lawmakers closed ranks after appeals from the government that financial aid would be more forthcoming if the island showed a concerted effort to trim spending and introduce long-overdue economic reforms.

Last week it passed legislation cutting the state payroll by up to 12.5%.

"The country is going through critical times," said Averof Neophytou, deputy leader of the main opposition Democratic Rally Party.

"For us, our country going bankrupt was and will never be an option."

Cyprus applied for a bailout in June when its two largest lenders turned to the state for aid after their regulatory capital was all but wiped out by a write-down of debt in Greece.

The island's banking system will require some 10 billion to recapitalise, a figure representing more than 50% of annual output.