Cyprus Seeks Alternative Solution to Debt Crisis

Petros Giannakouris/AP During a crucial meeting Wednesday, Cypriot leaders meet to find an alternative plan to raise €5.8 billion to finance a bailout of Cyprus banks at the presidential palace in Nicosia.

NICOSIA, Cyprus — The Cypriot government and the country’s central bank were working Wednesday on an alternative proposal to stave off bankruptcy, a day after Parliament rejected an initial plan to raise billions of euros by seizing up to 10 percent of people’s bank savings.

Government spokesman Christos Stylianides said a meeting was underway at the central bank to discuss an alternative plan for raising funds, but also for reducing the €5.8 billion ($7.5 billion) that must be found domestically.

“A team of experts from each party are on their way to the central bank to discuss a Plan B regarding the financing and reduction of the €5.8 billion,” said Stylianides. “They have now gone to the central bank to assess this possibility and for party representatives to know what this plan is.”

The bank’s deputy governor Spyros Stavrinakis said no decision had been taken on when banks, which have been shut since the weekend, would reopen. The new plan being worked on hasn’t yet been presented to the country’s euro partners and International Monetary Fund, he said.

The meetings were taking place a day after lawmakers rejected a plan to seize up to 10 percent of people’s bank deposits, a key demand from prospective creditors in exchange for rescue money to save the Cypriot banking system and shore up the government’s finances.

The banks remained shut for the third day running and there are growing expectations that they may not reopen until next week, certainly not until Cypriot authorities come up with a credible financial package that has the blessing of the European Commission, the European Central Banka and the IMF, the so-called troika. The package must also win approval from lawmakers.

Anastasiades was also due to meet with representatives from the creditors later in the day.

Meanwhile, his finance minister, Michalis Sarris, was in Moscow for meetings with his Russian counterpart. Russia could play a key role in any alternative package that may emerge. Russians are believed to account for just under a third of Cyprus’s €68 billion in bank deposits.

And in a surprise development, the head of Cyprus’ influential Orthodox church, Archbishop Chrysostomos II, said he would put the church’s assets at the country’s disposal, saying the church was willing to mortgage its assets to invest in government bonds. The church has considerable wealth, including property, stakes in a bank and a brewery.

“The wealth of the church is at the disposal of the country,” Chrysostomos said after meeting with Anastasiades.

Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.