Cyprus: talks to seal bailout deal next week

AP News
Posted: Oct 17, 2012 12:44 PM
Cyprus: talks to seal bailout deal next week

NICOSIA, Cyprus (AP) — Cyprus' finance minister said Wednesday that he expects the final round of talks with potential creditors on a bailout agreement to likely begin next week.

Vassos Shiarly says there's no specific date when officials from the so-called troika — the European Commission, the European Central Bank and the International Monetary Fund — will arrive here. But he expects negotiations to start immediately after the government this week wraps up discussions with political parties and trade unions on the kind of bailout deal the country should seek.

Shiarly said negotiations with the troika will begin "definitely within the coming week" because "time is limited and so we're working on a very tight schedule."

Shiarly said that the troika wants Cyprus to make €975 million ($1.28 billion) in spending cuts over three years. Estimates on the size of the bailout Cyprus will need to prop up its ailing banks and pay its bills range between €12 billion to €17 billion ($15.74 billion to $22.3 billion).

Cyprus's coffers are drying up fast and the country —with its credit rating deep into junk — can't tap international markets. A bid to clinch a €5 billion ($6.56 billion) low-interest loan from Russia appears to have stalled. Cyprus last year asked and received from Moscow a €2.5 billion ($3.28 billion) to get by this year.

Now the rush is on to hammer out an agreement by Nov. 12 when ministers from the other 16 countries that use the euro meet to discuss Cyprus' case and sign off on the bailout so that the first batch of cash can arrive before the year is out.

"There is only one aim now, and that's to save this country and lead it out of crisis," opposition DIKO party spokesman Fotis Fotiou said. "It's time to put Cyprus above party considerations."

Cyprus asked for a bailout in June with troika officials visiting in July. But delays in soliciting support from political parties and trade unions to avoid social upheaval pushed negotiations with the troika back and prompted calls from top European Union officials to speed things up.

Shiarly said Cyprus needs €4.5 to €5 billion ($5.9 to $6.56 billion) to refinance its debt over the next three years. But he repeated that the government disagrees with the troika on how much the banks' recapitalization needs will be, amid concerns that a high figure will make the country's debt level unsustainable.