Cypriot President Nicos Anastasiades was expected in Brussels on Sunday in a last-ditch effort to avoid a financial meltdown, with a bailout from the European Union and the island's place in Europe's single currency bloc hanging in the balance.
Facing a Monday evening deadline to avert a collapse of the Cypriot banking system, talks in Nicosia to seal a bailout from the EU and International Monetary Fund broke up late on Saturday without result.
"Negotiations are at a very delicate phase,» the Cypriot government said in a statement. «The situation is very difficult and the deadlines are very tight,» it said.
Anastasiades was due to arrive in Brussels in mid-morning to continue the talks, it said.
The tone of the statement differed sharply from earlier expressions of cautious optimism during days of intense negotiations between Cypriot leaders and officials from the island's «troika» of international lenders, the EU, IMF and European Central Bank.
Cyprus' overgrown banking sector has been crippled by exposure to crisis-hit Greece, and the EU says the east Mediterranean island must raise 5.8 billion euros on its own before it can receive a 10 billion euro bailout.
Without a deal on Monday, the ECB says it will cut off emergency funds to Cypriot banks, spelling certain collapse and potentially pushing the country out of the eurozone.
Finance Ministers of the 17-nation eurozone will meet at 6 pm Greek time on Sunday.
Scrambling to find the funds, officials said Cyprus had conceded to a one-time levy on bank deposits over 100,000 euros, a dramatic U-turn from five days ago when lawmakers angrily threw out a similar proposal as «bank robbery."
A senior Cypriot official said Nicosia had agreed with its lenders on a 20 percent levy over and above 100,000 euros at the island's largest lender, Bank of Cyprus, and four percent on deposits above the same level at other banks.
Finance Minister Michael Sarris spoke of «significant progress» in morning talks, as angry demonstrators outside the finance ministry chanted «resign, resign!"
Cypriot media reports suggested talks were stuck on a demand by the IMF that Bank of Cyprus absorb the good assets of competitor Popular Bank and take on its 9 billion-euro debt to the central bank as well. The reports said the Cypriot government was resisting.
A Cypriot plan to tap pension funds had already been shelved, a senior Cypriot official told Reuters, under opposition from Germany, which had warned the measure might be even more painful for ordinary Cypriots than a deposit levy.
It was also far from certain that a majority of lawmakers would back a revised levy, or whether the government might even try to bypass the assembly.
Ordinary Cypriots have been outraged by the levy and stunned at the pace of the unfolding drama. They elected Anastasiades in February on a mandate to secure a bailout and save banks whose capital was wiped out by investments in Greece, the epicenter of the eurozone debt crisis.