Cyprus requested a bailout in June 2012 but it was not possible to reach an agreement with the last, communist-led government. A new, conservative government took office last month and negotiations have intensified.
The troika of European Union, International Monetary Fund and the European Central Bank would send a mission of experts to Cyprus today for a technical analysis of the country's financing needs and to get a better understanding of the new Cypriot government, ECB board member Jörg Asmussen said.
President Nicos Anastasiades promised on 28 January to work for a swift deal to prop up the island's banks, which need capital of €8-10 billion. The total bailout, including financing for general government operations and to finance existing debt, could be up to €17 billion, equal to Cyprus's annual economic output.
Two eurozone officials said ministers meeting in Brussels did not agree on how best to finance the bailout, but were committed to a deal by the end of March.
"The Eurogroup called on the international institutions and Cyprus to accelerate their work on the building blocks of a programme, and agreed to target political endorsement of the programme around the second half of March," the ministers said in a statement.
Removing one of the stumbling blocs for an agreement, the new Cypriot authorities had agreed to an independent review of how Cypriot banks are implementing anti-money-laundering laws, the eurozone statement said.
That is likely to appease Germany, which has raised concerns about money-laundering on the island.
The ministers examined a variety of options to finance the bailout and ensure that it is "sustainable" - that Cyprus can repay what it borrows.
Privatisation, restructuring
One way to help that goal is privatisation of state assets, starting with the island's telecoms company, which could raise up to €1.5 billion. Cyprus also needs to restructure the bloated banking sector, which has assets eight times larger than the island's €17 billion economy.
German officials, backed by the Netherlands and Finland, have pushed for depositors in Cypriot banks, many of whom are Russian and British business people, to help pay for the cost of the rescue, a process known as a "bail-in".
But Cyprus fears any "bail-in" will spark the rapid withdrawal of funds from the island and undermine its entire business model, making the economic situation even worse.
Cyprus's newly appointed finance minister, Michael Sarris, called the bail-in idea a bad proposal.
"Really and categorically - and this doesn't only apply in the case of Cyprus but for the world over and the eurozone - there really couldn't be a more stupid idea," Sarris, a widely respected economist, told reporters last week.
