Cyprus's parliament voted to back a European Union bailout on Tuesday, tying lawmakers to impose substantial losses on bank depositors, and wind down one of the island's biggest banks.
By a show of hands, 29 lawmakers approved ratification of the bailout bill and 27 opposed.
The government had warned that without approval the economy was in imminent danger of default.
Cyprus is expected to get the first disbursement of a total of 10 billion euros ($13 billion) in aid from the European Union and the International Monetary Fund in May.
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Finance Minister Harris Georgiades described the situation as "extremely difficult," before the parliament met at 2 p.m. London time on Tuesday to ratify the terms of the aid package.
Without a bailout, Cyprus would face "incomparably tougher difficulties" and a fiscal "nightmare," Georgiades told lawmakers.
No single party has a majority in the 56-member parliament and the government was counting on the support of its three party center-right coalition, which has 30 seats.
The Communist AKEL party, socialist Edek party and the Green Party previously said they would reject the bill.