Race on to complete Cyprus rescue plan

Politicians in Cyprus are racing to complete an alternative plan to raise the funds necessary for the country to qualify for an international bailout, with a potential bankruptcy just three days away.

Finance officials were meeting with representatives of its prospective creditors and working on several new laws today, including a crucial bill that would impose some form of a tax on bank deposits.

The percentages and where the tax would apply are unclear, but one MP said Friday it could be less than 1% on all deposits.

Late Friday, Parliament passed nine bills, including three key ones to restructure ailing banks, restrict financial transactions in emergencies and set up a “solidarity fund.”

Cyprus needs to raise €5.8bn to secure its international bailout.

MPs soundly rejected an unpopular initial plan that would have seized up to 10% of people's bank accounts, and is now seeking a way to raise the desperately needed money.

Finance minister Michalis Sarris said it was unclear when new legislation raising funds would be completed and put to a vote in parliament, but that it could be as early as tonight.

Time is running out fast. The European Central Bank has said it will stop providing emergency funding to Cyprus’ banks after Monday if no new plan is in place. Without ECB’s support, Cypriot banks would collapse on Tuesday, pushing the country toward bankruptcy and a potential exit from the 17-nation eurozone.

Representatives of the troika - the IMF, ECB and European Commission - were meeting officials in the finance ministry throughout the morning.

Troika consent is essential as they will determine whether the plan that the Cypriots come up with would meet the requirements for the bailout before it is presented to the eurozone finance ministers for final approval.

A eurogroup meeting of the finance ministers is expected to be held in Brussels over the weekend, and Cyprus president Nicos Anastasiades was also to fly there, potentially as early as today.