Cyprus on verge of financial death

NICOSIA, March 23 (AFP) - Cyprus reported ,significant progress’ in talks today with the EU and IMF aimed at clinching a 10 billion- euro ($13 billion) bailout to save the eurozone member from looming bankruptcy.

The Cypriot authorities are scrambling to raise 5.8 billion euros before a Monday deadline set by the European Central Bank or it will cut off emergency financial aid to the island.

“Significant progress has been made towards achieving an agreement with the troika,” Finance Minister Michalis Sarris said after initial talks in Nicosia with officials from the EU, ECB and International Monetary Fund.

But “several issues arose that need further working on” in the talks, which centred on a proposal to impose a one-time charge on savings held at the Bank of Cyprus, the island's biggest lender.

Cyprus is considering imposing a tax of around 25 per cent on deposits of more than 100,000 euros held at the Bank of Cyprus, as well as restructuring Laiki Bank (or Popular Bank) into a “good” and “bad” bank.

But a Laiki economist told AFP the government was trying to convince the troika such a rate was too high.

“They are trying to convince the troika to take a lower 'haircut' than 25 per cent because parliament might not accept it,” said Yiannis Tirkides, adding the eurogroup might reject anything lower.