Debt crisis: Cyprus nears euro bail-out deal

Cyprus nears a €17bn (£14bn) bail-out by rescuers who said talks had made “good progress”.

Cyprus was tonight nearing a €17bn (£14bn) bail-out by rescuers who said talks had made “good progress”.

The island, a member of the euro, has been in discussions over what austerity measures would secure a deal.

State media earlier reported that an agreement had been reached but the lenders the European Commission, European Central Bank and International Monetary Fund said there was still work to be done, thought to be focused on Cypriot banks’ capital needs.

“Discussions are expected to continue from respective headquarters with a view to making further progress toward a potential programme,” the “troika” of lenders said in a statement.

Earlier, the Cypriot government had briefed trade unions on the terms of the draft agreement. A government spokesman said: “That there are unpleasant and painful measures and provisions ... is a given.”

The island and its financial sector are heavily exposed to the problems in Greece, the recipient of two bail-outs.

Cyprus has also had home-grown economic troubles, due to an explosion at a naval base on the island which last year knocked out its main power plant.