A solution to Cyprus’s bailout crisis within the framework set down by the European Union may be possible within “the next few hours”, the deputy leader of the island’s ruling Democratic Rally party has said.
The Cypriot parliament is due to vote later on Friday on a raft of new measures they hope will qualify the country for a bailout package to prevent the country from plunging into bankruptcy.
The legislators adjourned a Thursday session saying they needed more time for consultation.
“There is cautious optimism that in the next few hours we may be able to reach an agreed platform so parliament can
approve these specific measures which will be consistent with the approach, the framework and the targets agreed at the last Eurogroup,” Averof Neophytou told reporters.
The country needs to find a way to raise more than $7bn (5.8 billion euros) to qualify for $13bn (10 billion euros) in rescue loans from other eurozone countries and the International Monetary Fund.
The plan needs approval from eurozone and IMF and that remained elusive.
Eurozone officials said they had not seen all the details and would have to discuss whatever final plan Cyprus presents.
Jeroen Dijsselbloem, the Eurogroup president, said he was awaiting fresh proposals from Nicosia to finalise a bailout plan with the clock ticking for Cyprus to avoid bankruptcy.
“The situation is very uncertain, we’re waiting for Cyprus to propose alternatives,” Dijsselbloem, who is also Dutch finance minister, was quoted as saying by national news agency ANP after a cabinet meeting.
‘Levy on bank deposits’
Christos Stylianides, a Cyprus government spokesman, said: “The next few hours will determine the future of this country.”
Cyprus has had to come up with the new plan after legislators rejected a scheme that would have seized up to 10 percent of people’s bank deposits.
But Michael Sarrism, the Cypriot finance minister, said that a levy on bank deposits was “clearly on the table” at talks between Cypriot leaders.
“I think that is clearly on the table, that is something that needs to be discussed to see whether a levy on deposits of some sort … would make a contribution to finalising the package,” he told reporters on arrival in Cyprus from Moscow.
“We are now talking about different numbers and we have to look at what are the possible sources,” he said.
The plan needs to be in place by Monday, when the European Central Bank has said it will cut off emergency support to the banks.
That could trigger their collapse and devastate the economy, potentially pushing the country to leave the 17-country euro currency union.
“We are trying very hard,” Neophytou, told reporters on the progress of talks.
As part of the package being discussed on Friday, legislators were considering restructuring the country’s second largest lender, Laiki, which suffered big losses on Greek debt investments.
A large part of deposits in Laiki above the 100,000 euros ($129,000) that are insured could be confiscated.
Banking officials estimate the restructuring will account for 3.6 billion euros of the 5.8 billion euros the country needs to raise.
The rest of the money could come from a proposed tax on deposits from the Bank of Cyprus, the country’s largest lender, one legislator with knowledge of the deliberations said on condition of anonymity because the talks were ongoing.