ATHENS--A senior Cypriot official held out hope Friday that a
deal on a plan to unlock billions in international aid for the
island's teetering economy was just hours away.
"I believe that we may have a result this day," said the
parliamentary leader of the ruling Democratic Rally party, Averof
Neophytou.
Cyprus's parliament is expected to convene later Friday to vote
on a bill that would impose strict capital controls on the island.
A bank resolution law has also been submitted to the Cypriot
parliament.
"We are trying hard to reach a compromise solution for our
problem," he said. "We believe that in the next few hours we could
be able, with a lot of difficulties to reach a framework that would
be in the policies of the European Union, the European Central Bank
and the International Monetary Fund."
Earlier Friday, the island's government spokesman said the
country is in the final stage of negotiations with a delegation of
inspector from those institutions.
"The president and the government are negotiating hard and are
in the final stages with the troika to conclude on solutions that
would safeguard the banking system and the wider economy and will
bring back calm to the country," government spokesman Christos
Stylianidis said. "In a few hours, we will be called on again to
take major decisions and respond to the tough dilemmas."
The government has for days been trying to put together a plan
for raising 5.8 billion euros ($7.5 billion). That's the amount
Cyprus must cough up to secure 10 billion euros ($13 billion) in
loans from the EU and the IMF to prop up the island's failing
banking sector.
Earlier this week, parliament rejected a deal that includes a
tax on bank savings accounts.
A Democratic Rally lawmaker, Marios Mavridis, told state
television RIC Friday that if the levy is resurrected, it will be
applied to deposits of more than EUR100,000. Previously all
deposits were to be taxed.
"Haircut will be our last choice. It is bad it wasn't our
first," he said.
The proposed capital controls would allow authorities to
restrict non-cash transactions, curtail check cashing, limit
withdrawals and even convert checking accounts into fixed-term
deposits when banks reopen. They have been closed since March
16.
A bank resolution law has also been submitted to the Cypriot
parliament and is expected to be voted.
Cyprus is preparing to wind down Cyprus Popular Bank PCL
(CPB.CP), also known as Laiki Bank, the country's second-largest
lender, while ringfencing its largest lender, Bank of Cyprus PCL
(BOCY.CP).
The plan would involve splitting Laiki's assets into good and
bad units and merging the good assets with Bank of Cyprus.
Write to Nektaria Stamouli at nektaria.stamouli@dowjones.com
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