Ball back in Cyprus' court

The Eurogroup of eurozone finance ministers said on Tuesday it was still committed to helping Cyprus after the country's parliament voted against the levy, a key condition of the proposed bailout loan.

While the outcome of the vote was "disappointing," Dutch Finance Minister and Eurogroup chair Jeroen Dijsselbloem said the offer remained on the table.

"I confirm that the Eurogroup stands ready to assist Cyprus in its reform efforts and reiterate the position of the Eurogroup," said Dijsselbloem, giving no indication that the bailout terms could be altered.

Speaking to the Dutch national broadcaster NOS, Dijsselbloem said Cyprus would have to decide on the next course of action, adding that 10 billion euros ($13 billion) was the maximum amount that the country could realistically pay back. The Eurogroup insisted on a levy on accounts to raise an additional 5.8 billion euros deemed necessary to stabilize the country’s finances.

"I deeply regret Cyprus's decision but the ball is still in their court," said Dijsselbloem.

In the vote on Tuesday, 36 Cypriot lawmakers in the 56-seat parliament voted against the levy, with no votes in favor and the remainder abstaining.

'Debt is too high'

Germany, known for its hard line on the bailout terms, also said it regretted the vote outcome. With Cyprus currently unable to borrow money on the open market, he said, the eurozone had to look for a sustainable solution.

"We will help only with the precondition that Cyprus adopts a viable program," said German Finance Minister Wolfgang Schäuble. "We will help the Cypriots to solve their problems but not just to carry on just as we did before."

"For an aid program we need a calculable way for Cyprus to be able to return to the financial markets. For that, Cyprus's debt is too high."

A Eurogroup statement on Monday suggested that Cyprus should spare any account under 100,000 euros from the levy. That would comply with an existing EU deposit guarantee to the same value. The gap in revenue would be made up by raising the levy on deposits above that value.

However, media reports on the island have suggested that the Cypriot government may seek other ways to address the 5.8-billion-euro shortfall. Bank restructuring and the securing of more Russian investments are among the possible options.

Banks in Cyprus have been closed since Friday and are scheduled to stay closed until Thursday. Withdrawals at cash machines have been capped at 800 euros per day.

rc / jlw (AFP, AP, dpa, Reuters)