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However, Cluse said there is a risk that Cyprus’ debt load may become unsustainable as the country is expected to enter a deep recession due to the cuts to its banking sector.
To further secure Cyprus’s economy, the size of the country’s banking sector — worth up to eight times the country’s gross domestic product of about 18 billion euros ($23.3 billion) — must be drastically reduced , said Jeroen Dijsselbloem, who chairs the meetings of the eurozone’s finance ministers.
Most Cypriot banks to reopen Tuesday
Cyprus’ central bank says all banks in the country except the two biggest will reopen for business on Tuesday, more than a week after they shut down to prevent a run.
Laiki and Bank of Cyprus will remain closed until Thursday, and a withdrawal limit from ATMs of 100 euros ($130) a day will also remain in place until then, the bank said.
Financial institutions in the country have been shut since March 16 as Cyprus and its international lenders struggled to agree on a plan to raise funds so the island could qualify for a bailout package.
The international creditors said the country’s business model of attracting foreign investors, including many Russians, with low taxes and lax financial regulation had backfired and needed to be reformed. The country would also have to cut its budget, implement structural reforms and privatize state assets.
Russia’s prime minister on Monday slammed the deal, saying the agreement was tantamount to theft: "In my opinion, the stealing of what has been stolen continues there."
Russian citizens hold as much as 20 billion euros ($26 billion) in Cypriot banks. Russian Deputy Prime Minister Igor Shuvalov also expressed concerns over the impact of Monday’s decision.
"Despite all the assurances that we’re receiving from the European Commission we fear that this (decision) could affect the stability of the euro, the stability of the eurozone and would send shockwaves to deteriorate the situation on the whole," he said.
Several national parliaments in eurozone countries such as Germany must approve the deal, which might take another few weeks. EU officials said they expect the whole program to be approved by mid-April.
Menelaos Hadjicostis in Nicosia, Geir Moulson in Berlin, Don Melvin and Juergen Baetz in Brussels, Pan Pylas in London and Nataliya Vasilyeva in Moscow contributed to this report.
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