BRUSSELS (AP) -- A top European official is leading a high-level meeting Sunday afternoon in a last-ditch effort to help Cyprus come up with a plan necessary for a 10 billion euro bailout loan that would save it from bankruptcy.
The day of talks could prove critical — not only for the future of the small island country, but also for the 17-nation eurozone. If Cyprus or its banks were to collapse, officials fear that a lack of confidence could spread to other countries that use the euro, triggering higher borrowing costs or capital flight from those countries.
Cyprus is racing to meet a Monday deadline to come up with a plan to raise 5.8 billion euros ($7.5 billion) in order to get the bailout from the other European countries that use the single currency, as well as from the IMF.
Cyprus has "to fulfill a difficult mission to save the Cypriot economy and avert a disorderly default threatening the economy if there is no final deal for the loan agreement," government spokesman Christos Sylianides said in a written statement.
Cypriot President Nicos Anastasiades and Finance Minister Michalis Sarris were flying to Brussels, Sylianides said. Anastasiades was to be in constant contact throughout the negotiations in Brussels with party leaders who would be in the presidential mansion in Nicosia, he said.
An EU spokesman said European Council President Herman Van Rompuy would lead the meeting, with Anastasiades and European Commission President Jose Manuel Barroso attending. The Council is the gathering of 27 EU heads of state and government; the Commission is the EU's executive arm.
Van Rompuy's role will not be to reach a final agreement, but to facilitate efforts to find a solution, spokesman Preben Aamann said. Any new proposal would have to be approved Sunday evening by the Eurogroup, the gathering of finance ministers from the 17 EU countries that use the euro currency.
The IMF, European Central Bank and European Commission will then determine whether any plan put forward by Cyprus meets the requirement that Cyprus' debt, including any new bailout loan, be sustainable over the long run.
To avoid bankruptcy or the collapse of its banking system, Cyprus needs significantly more than the 10 billion euros the international creditors are willing to lend it. For that reason, the country must somehow raise — and not through borrowing — the additional money.
The original plan, agreed to in marathon negotiations, called for a one-time "levy" on all bank depositors in Cypriot banks. The proposal ignited fierce anger among Cypriots and failed to garner a single vote in the Cypriot Parliament.
German Finance Minister Wolfgang Schaeuble underlined that time was of the essence. The European Central Bank says it will stop providing emergency funding to Cyprus' banks after Monday if no new plan is in place.
"Cyprus will go down a tough path — either way. But that's not the consequence of European stubbornness but of a business model that no longer works," he said.
Following the Van Rompuy meeting, Anastasiades will meet with Christine Lagarde, the managing director of the International Monetary Fund, and Mario Draghi, president of the European Central Bank, Cypriot spokesman Nikos Christodoulides said.
Associated Press writers Juergen Baetz in Brussels and Elena Becatoros in Nicosia, Cyprus, contributed to this story.
Don Melvin can be reached at https://twitter.com/Don_Melvin