Eurogroup maintains stance on Cyprus bailout deal

BRUSSELS - Eurozone finance ministers late Monday reiterated that the bailout deal for Cyprus reached two days ago is the best solution to prevent the Mediterranean island from bankruptcy.

The agreement reached on March 16 "reflects the consensus reached by the Cypriot government with the Eurogroup", Eurogroup head Jeroen Dijsselbloem said after a conference call of eurozone finance ministers.

According to the bailout deal, depositors in Cypriot banks will be hit with a one-off tax on their savings, marking the first bailout for any eurozone country in which depositors will directly lose money.

Holders of bank accounts with more than 100,000 euros will be taxed at 9.9 percent, and a 6.75-percent levy will be imposed on deposits below that level, raising an expected 5.8 billion euros for Cyprus.

"I reiterate that the stability levy on deposits is a one-off measure," he said in a written statement after the meeting.

"This measure will, together with the international financial support, be used to restore the viability of the Cypriot banking system and hence, safeguard financial stability in Cyprus," he added.

"In the absence of this measure, Cyprus would have faced scenarios that would have left deposit holders significantly worse off," he stressed.

In the statement, the Eurogroup also reassured small depositors by saying that they should be treated differently from large depositors and reaffirmed the importance of fully guaranteeing deposits below 100.000 euros.

To ease market concerns, Eurogroup told the Cypriot authorities to introduce "more progressivity" in the one-off levy compared to what was agreed on March 16, provided that it continues yielding the targeted reduction of the financing envelope.

The Eurogroup also urges "a swift decision" by the Cypriot authorities and parliament to rapidly implement the agreed measures, while promising to assist Cyprus in its reform efforts on the basis of the agreed adjustment program.