Cyprus gov't says next few hours to determine its future

 • The Cypriot government said on Friday that it is engaged in hard negotiations with international lenders.

 • "The next few hours will determine the future of the country," said government spokesman.

 • One of the bills provides for setting up a so-called "Investment Solidarity Fund".

NICOSIA, March 22 (Xinhua) -- The Cypriot government said on Friday that it is engaged in hard negotiations with international lenders, and the hour for truth for the eastern Mediterranean island is near.

"The next few hours will determine the future of the country," said government spokesman Christos Stylianides in a dramatic appeal to lawmakers to vote on emergency measures aimed at saving the country from economic collapse.

"Undoubtedly, there will also be painful aspects in any decision taken, but the country must be saved ... We must all assume our responsibility," Stylianides said.

His dramatic call came as parliament was preparing to meet in an emergency session to debate a series of bills aiming at the consolidation of the banking system.

One of the bills provides for setting up a so-called "Investment Solidarity Fund" and is designed to close a gap of 5.8 billion euros (7.48 billion U.S. dollars).

Raising that amount is a condition set by the Eurogroup and the International Monetary Fund for providing bailout help worth 10 billion euros, after the Cypriot parliament rejected a levy on bank deposits.

Stylianides refused to comment on reports that the deposits tax is still on the table after Germany said that raising the money through the Investment Solidarity Fund was not acceptable.

Bank of Cyprus, the island's biggest lender, had earlier made a dramatic appeal to both the government and the parliament to immediately adopt the Eurogroup's proposal for a levy on bank deposits of over 100,000 euros.

"Since it is evident that there are no alternative solutions there must be no further delay in adopting the Eurogroup's proposal," said a Bank of Cyprus statement.

It added that in case this was not done quickly there was a risk for the collapse of the entire banking system.

The Bank of Cyprus warned that a return to the old currency, the Cyprus pound, would mean a significant loss of assets value that would lead to a vicious circle of devaluation and hyperinflation which would result in throwing the country and its people into misery.

Cypriot banks are to reopen on Tuesday after a prolonged bank holiday decreed by the ministry of finance to avoid a run on deposits.

The European Central Bank has sent Cyprus an ultimatum that it will stop providing emergency liquidity assistance after Monday if by that time there is not a bailout deal in place.

Other important legislation to be considered by parliament provides for the consolidation of Cyprus Popular Bank which is on the verge of immediate collapse.

Under a restructuring plan, the banks operations will be split into "good" and "bad".

The "good" section of operations includes deposits of up to 100,000 euros and loans which are serviced plus some other assets. All other operations comprised of deposits of over 100,000 euros and non-serviced loans, which will be taken up by a "bad" bank to be liquidated after several years.

In a related development, Greece and Cyprus announced on Friday that a deal was concluded providing for the take over of the Greek units of Cypriot banks by a Greek banking group.

Cyprus and Greece have agreed to spin off the Greek branches in Cypriot banks, the Cypriot presidency said on Friday.

The agreement was reached "after talks between Cyprus President Nicos Anastasiades and Greek Prime Minister Antonis Samaras," the Cypriot presidency said in a statement.

The spinoff issue "has been settled with the most favorable terms under the present circumstances, with a significant benefit for the Cypriot side," local media reported, citing the statement. (1 euro = 1.29 U.S. dollars)