Local
articles | 14 December 2014

Cyprus mulls asking troika to use Coop earmarked funds to refinance debt

Finance Minister Harris Georgiades said the government is considering requesting international lenders to allow Cyprus use €1 billion of bailout money initially earmarked for the recapitalisation of the cooperative banks to refinance existing debt.

“There could be another form of utilisation which we have not yet discussed with the troika,” Georgiades said in an interview to state radio CyBC today. “We are interested in replacing existing expensive loans”.

The Central Cooperative Bank completed its recapitalisation with €1.5 billion earlier this year as agreed with international creditors under the terms of the March 2013, €10 billion bailout agreement. The lender was successful in completing the European Central Bank’s asset quality review in October showing a €331 million capital surplus in the extreme case scenario, which made the use of the additional 1 billion euros earmarked for its recapitalisation unnecessary.

Georgiades said that Cyprus, which is currently informing international investors since December 9, about recent developments in the economy ahead of a possible new debt issue to refinance maturing debt with new one of longer maturity, that the fact that Cyprus is no longer generating a fiscal deficit, “makes our position advantageous as we can choose the right moment”.

In January to October, Cyprus generated a €679.8 million primary surplus and a €274.9 million fiscal surplus on a cash basis, compared to a €15.8 million primary surplus and a €474.8 million deficit a year before, according to the finance ministry’s latest figures. Public debt stood at €18.3 billion on September 30, this year compared to €18.4 billion a year before. Interest payments in the first ten months of the year fell to €404.9 million compared to €490.6 million a year before.

Georgiades did not disclose the time of the new debt issue.

Source: Cyprus Mail

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