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Euro Zone Meets on Friday to Try to Seal Cyprus Deal

Wednesday, 13 Mar 2013 | 5:34 AM ET
Cyprus, Episkopi Bay
Maurice Smith | Photononstop | Getty Images
Cyprus, Episkopi Bay

The euro zone's 17 finance ministers will meet on Friday in Brussels after an EU leaders' summit to discuss a financial bailout of Cyprus, officials said on Wednesday, signalling growing momentum for a deal.

The meeting, which will come both after the summit and a mission by the troika of international lenders to Cyprus, raises expectations that the euro zone is close to sealing a package of aid that the Mediterranean island asked for last June.

"Friday 5 p.m. (1600 GMT) extra Eurogroup on Cyprus," Dutch Finance Minister Jeroen Dijsselbloem, who chairs the meetings, said on his official Twitter feed.

Crippled by its exposure to Greece, Cyprus needs funds from the euro zone to recapitalise its banks and to finance the government over the next three years.

Without help, Cyprus would slide into default, risking the euro zone's credibility and threatening progress made last year in convincing investors that the bloc will not be overwhelmed by its debt problems.

Initial estimates on the size of the bailout were as much as the whole Cypriot economy produces in a year, some 17 billion euros ($22 billion), raising doubts whether the euro zone member state would ever be able to pay back the money.

But officials told Reuters late on Tuesday that Cyprus may require a smaller bailout than that because it could raise money from a levy on deposits and other taxes.

The international troika of lenders, the European Commission, the European Central Bank and the International Monetary Fund, have been in Cyprus and told euro zone finance ministers enough progress had been made in Nicosia to hold the Eurogroup meeting in Brussels, officials said.

The lenders are also discussing the possibility of Cyprus raising its corporate tax by 2.5 points to 12.5 percent. The lenders would also like to see Cyprus introduce a financial transaction tax, something the country opposes.

Euro zone officials have said they expected a decision on a bailout for the Mediterranean island to be taken before the end of March.

German Finance Minister Wolfgang Schaeuble told conservative politicians on Tuesday that Germany's Bundestag lower house of parliament would vote on aid for Cyprus before a wider European decision, but he did not set a date.

Contact Europe: Economy

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