NICOSIA, March 18 (Xinhua) -- Cyprus parliament is expected to hold a crucial emergency meeting on Monday afternoon to vote on a bill imposing a levy on bank deposits following a Eurogroup bailout decision for the eastern Mediterranean island.
Analysts predict that the outcome of the vote may lead to a total collapse of Cyprus' economy which is geared on providing services and banking facilities to several thousand offshore companies and investors.
Every vote in the 56-member House of Representatives is now crucial.
Demetris Syllouris, the leader of the European Party which has already come out against the levy, said on Monday morning that he will vote to pass the levy bill only if the government accepts a provision that depositors who will suffer a loss will be compensated in the form of interest bearing government bonds.
Even the junior partner party in the coalition government also said the way its eight deputies will vote will depend on certain conditions which will be submitted before parliament meets at 1400 GMT to debate the legislation.
Until that time, the bill will be scrutinized by the parliamentary finance committee, which will consider several amendments demanded by the parties.
The Eurogroup asked for the levy to be imposed on all bank deposits to raise an estimated 5.8 billion euros to partially meet bank recapitalization needs, estimated at about 10 billion euros.
If the measure passes the parliament hurdle, a one-off tax of 6.75 percent will be imposed on deposits less than 100,000 euros, while deposits above this mark will be taxed with 9.9 percent. The high-end scale includes deposits by Russians estimated at 15 billion euros, with almost another 22 billion euros worth of deposit belonging to other foreigners, many of them were British retired and living in Cyprus.
Cyprus President Nicos Anastasiades has said he had to bow to the Eurogroup decision after a warning by the European Central Bank that Emergency Liquidity Assistance on which Cyprus banks entirely rely would be stopped as of March 21, leading to their collapse.
The government renewed its appeal on Monday to opposition parties to reconsider their decision in rejecting the bill.
"Passage of the legislation will lead to a difficult but manageable situation but a negative vote will most certainly lead us into disaster," Government spokesman Christos Stylianides said a few hours ahead of the vote.
The Central Bank of Cyprus said that whatever the result of the vote may be, commercial banks will open as usual on Tuesday after Monday's bank holiday and will have adequate liquidity for transactions.
However it added that the situation may change if authorities decide later in the day that there are compelling reasons to keep banks closed - meaning a feared run on deposits.
The Cyprus crisis has unnerved the global markets, with the euro losing ground to the dollar and the yen and shares tumbling upwards by 1.5 percent.