Cyprus bailout: German finance minister sceptical on Cyprus Plan B

FRANKFURT (AFP) - German Finance Minister Wolfgang Schaeuble is sceptical about the Cyprus government's "Plan B" to avoid financial meltdown, the mass-circulation daily Bild reported on Friday.

"Cosmetic changes alone are not enough," the newspaper quoted Mr Schaeuble as saying, citing government coalition members who took part in a meeting with the minister late on Thursday.

Cyprus "must move and take serious measures" to consolidate its finances, he was quoted as saying.

Nicosia is scrambling to overhaul its banking sector to avoid financial meltdown, after the European Central Bank threatened to pull the plug on emergency funding for the island's lenders.

Cypriot politicians have until Monday to approve a "Plan B" bailout deal with the European Union and International Monetary Fund or face being choked from the ECB funds, which would likely cause teetering banks to collapse.

There was also intense pressure for a deal from the European Union. One source warned that Cyprus risked expulsion from the euro zone if parliament failed to approve a workable plan to restructure its outsized banking sector by Tuesday.

But MPs adjourned an emergency session late on Thursday without voting on the first two bills in a package of draft legislation the government has drawn up as part of its revised plan.

They said they needed more time to study the plans to set up a "national solidarity fund" and impose capital controls to prevent a run on the banks when they reopen on Tuesday after more than a week.