Cyprus Finance Minister in Moscow for Talks

Cypriots protest against EU bailout and plans for a levy on bank deposits. Photo by EPA/BGNES

Cyprus Finance Minister Michalis Sarris is set to be in Moscow for talks on Wednesday, hoping to negotiate a delay in the repayment of Russia's EUR 2.5 B loan.

Russia has also said it may reconsider the terms of the loan it made to Cyprus in 2011, which was separate from the proposed eurozone bailout.

Cypriot Finance Minister Michalis Sarris arrived in Moscow on Tuesday to see if the repayment on that loan could be delayed until 2020, and whether the interest rate could be reduced.

But any tax on bank accounts, even if mitigated by a loan from Russia, would still carry the risk of a serious flight of capital, according to commentators.

Russians account for about a third of all deposits in Cypriot banks, and Russian banks have lent heavily to businesses on the island.

The plan to tax bigger deposits at a higher rate has angered Russia.