Crunch talks for Cyprus

The pieces of emergency legislation approved by parliamentarians on Friday include one that is designed to restructure Cypriot banks, which have lost billions on bad Greek debt and another that places restrictions on financial transactions during times of crisis.

This is seen as an attempt to prevent a run on the country's banks when they reopen for business next Tuesday after remaining closed for the past week.

A third measure passed on Friday is to create a "solidarity fund" through the nationalization of people's pensions. As lawmakers inside the legislature debated the bills, angry protesters demonstrated outside.

Lawmakers, though, put off dealing with by far the most controversial measure, a proposed levy to be imposed on the country's bank accounts. A proposal agreed last week ago would have seen Cypriot bank account holders have 6.75 percent of their deposits deducted to help raise the 5.8 billion euros ($7.5 billion) to secure the 10-billion-euro bailout. For savings of over 100,000 euros, that figure was to rise to 9.9 percent. However, mass protests forced the government to back down on the plan.

EU officials also conceded that Cyprus could change the terms of the deal, as long as it came up with the 5.8 billion euros.

President Nicos Anastasiades and party leaders were to head to Brussels for more talks with EU officials on Saturday.

"The EU/IMF is in negotiations with the government on the level of the deposit tax and whether it will just apply to the Bank of Cyprus or will include all banks operating in Cyprus," government spokesperson Christos Stylianidis said.

There is no official word on what level the new levy, or deposit tax, could come in at, but reports out of Nicosia indicate that bank account holders will not be off the hook entirely.

Following a meeting with officials from the European Union, European Central Bank and the International Monetary Fund in Nicosia on Saturday, Finance Minister Michael Sarris told the Reuters news agency that a 25 percent levy was being considered for deposits of more than 100,000 euros at the country's third-largest lender, Bank of Cyprus. Sarris also spoke of "significant progress" make during his meeting.

Depending on how Saturday's talks go, the Cypriot parliament could meet again over the weekend to pass more legislation aimed at achieving the 5.8 billion goal.

This comes as the entire eurozone continues to hold its collective breath to see whether Cyprus beats a Monday deadline to clinch the bailout. If it fails, the European Bank says it will cut off emergency funding Cypriot banks, which would almost certainly lead to their collapse. This could lead to Cyprus being forced to leave the eurozone of 17 countries that use the euro as their common currency.

There are indications that Cyprus is set to leave the final decision to the last minute, with one lawmaker telling Reuters that parliament would not reconvene until after a meeting of eurozone finance ministers on Sunday afternoon.

"We will meet after the Eurogroup meeting," the parliamentarian, who spoke on condition of anonymity, said. "I don't know when."

pfd/mz (AFP, Reuters, dpa, AP)