Eurozone Crisis: Cyprus Poised For Bailout

Discussions between Cyprus and European officials are ongoing, as the island negotiates the terms of a sovereign bailout.

Cyprus government officials said they had agreed on a package with the European Union (EU) and International Monetary Fund (IMF (Other OTC: IMFAF.PK - news) ).

But the European Commission (EC) denied that a deal had been struck, adding that discussions are ongoing.

"Discussions are expected to continue from respective headquarters with a view to making further progress toward a potential program," a a joint statement from the EU, IMF and EC said.

If the deal is approved, it would make the Mediterranean island the fourth country in the eurozone to request a sovereign bailout, as the region struggles to contain its debt crisis.

Cyprus requested a bailout - which could be worth as much as £17.5bn, or its total GDP - after its banks failed to cope with their exposure to Greece.

"The deadline that was set by the European Central Bank for the recapitalisation of the banks expired, so we had to enter the rescue mechanism," spokesman Stefanos Stefanou said.

"The bailout deal includes unpleasant measures."

Greece, Ireland (Xetra: A0Q8L3 - news) and Portugal have already received bailouts to help manage their debt levels, while Spain received a 100bn euro (£80.8bn) aid package to bolster its banking industry.