Cypriot politicians are continuing talks aimed at getting an 11th-hour agreement to avert an imminent financial meltdown. The ECB has threatened to cut off funding to Cypriot banks if no deal is in place by Monday.
As Cyprus's president, Nicos Anastasiades, entered talks with international creditors in Brussels on Sunday, it was unclear how close the tiny Mediterranean nation was to meeting the terms of a 10-billion-euro ($13 billion) bailout that would save its banks from looming insolvency.
Eurozone finance ministers arrived in Brussels on Sunday evening for talks that were expected to last into the night.
Meanwhile, the Central Bank of Cyprus imposed a limit of 120 euros ($155) per day on withdrawals from cash machines to prevent a run on banks.
The biggest sticking point appears to be the idea of imposing a levy on Cypriot bank accounts to help raise the funds. The original plan was to impose what some have described as a "deposit tax" of at least 6.75 percent on all savings in Cypriot accounts, no matter how small.
This was met with mass protest from Cypriot bank account holders and the country's parliament voted the measure down earlier in the week.
On Friday, parliament passed a number of measures aimed at meeting the troika's demands, but lawmakers stopped short of agreeing on a bank account levy. This appears to be the issue that Cypriot politicians and troika representatives spent much of Saturday talking about, but little in the way of detail has emerged.
The Reuters news agency quoted an unnamed senior Cypriot official who said they had agreed to a 20 percent levy on deposits of over 100,000 euros at the country's biggest lender, Bank of Cyprus, and a four-percent tax on similar accounts at other banks.
Late on Saturday, government spokesman Christos Stylianides issued a statement in which he described the negotiations as being in a "very delicate" phase.
"The situation is very difficult and the margins very limited," he said.
Earlier, Finance Minister Sarris had spoken of "significant progress" made in the discussions.
This was welcomed by the European Commissioner in charge of monetary and economic affairs. However Olli Rehn also warned that it was "essential" that an agreement be reached by Sunday night.
"Unfortunately, the events of recent days have led to a situation where there are no longer any optimal solutions available," in a statement released by his office said. "Today, there are only hard choices left."
The finance minster of Germany, which, as Europe's biggest economy, could be expected to wind up footing the lion's share of the bill, also warned that there was no easy solution for Cyprus.
"The eurozone countries want to help Cyprus, but the rules must be respected, the aid must be relevant and the program must tackle the problems at their root," Wolfgang Schäuble said in comments published in this Sunday's edition of the Welt am Sonntag newspaper.
Cyprus's fate could be decided as early as Sunday evening, which the finance ministers of the 17 countries that use the euro currency are to meet to discuss the issue.
pfd/mz (Reuters, AP, AFP)