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March 29, 2023

Cypriot president in last-ditch bailout talks in Brussels

Negotiations continued late in the evening. Also, Cyprus expects Greek support in Eurogroup. Bank employee unions warned that they would go on strike Tuesday if the decisions don’t safeguard employees’ jobs and providence funds.

Cypriot President Nicos Anastasiades arrived in Brussels on Sunday afternoon for talks with European Commission President Jose Manuel Barroso, European Council chief Herman Van Rompuy, European Central Bank head Mario Draghi, European Economic and Monetary Affairs Commissioner Olli Rehn and International Monetary Fund managing director Christine Lagarde, ekathimerini.com reports. The trip comes after a day of talks between Cyprus and the EU and IMF ended inconclusively. Cyprus needs to raise EUR 5.8bln to qualify for a 10bn bailout. Cypriot leaders are struggling to agree how to raise the money.  Also, ahead of the crucial Eurogroup session on Sunday evening, Cypriots expect strong support from Athens, after the island’s President has already confirmed Greece’s backing throughout the crisis.European Union economics chief Olli Rehn warned that any agreement would be painful for Cypriots. “The European Commission is working hard to facilitate a solution to help Cyprus. We recognise the progress now being made by the Cypriot government towards a solution which can pave the way for an agreement on a financial assistance programme for Cyprus. It is essential that an agreement is reached by the Eurogroup on Sunday evening in Brussels on a financial assistance programme for Cyprus. Cyprus has been at loggerheads with its European partners in recent days over an initially agreed and later abandoned bank-deposit levy.

But late Saturday, the country’s president Nicos Anastasiades expressed hope that a deal could be reached soon. German Chancellor Angela Merkel expressed frustration Friday with the way Cyprus is handling its bailout crisis. According to senior party officials who attended the meeting, Merkel said Cyprus appears to be waiting to see which side will blink first.On Friday, the Parliament in Nicosia adopted two key bills that would allow it to close down Cyprus Popular Bank, its second largest bank, and aggressively curtail the free flow of money on the island in a bid to avoid a meltdown of the country’s financial system before Monday evening, when the European Central Bank has said it would cut off emergency liquidity for the country’s banks. The bank restructuring law would see depositors in Popular Bank, also known as Laiki Bank, lose as much as 40 per cent of their savings above EUR 100,000, Cypriot and European officials said. European and Cypriot officials familiar with the latest plans said they left a funding hole of some EUR 3 bln.As details of the latest plan emerged late Friday and Saturday, there were signs that the country may be forced to also resolve Bank of Cyprus, its biggest lender.  But in a call Friday evening, senior European finance-ministry officials expressed doubts that the plan would raise enough money to protect the lender, according to two officials on the call.

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