articles | 30 January 2013

Government has next three months financing covered

The government says it is on track to cover the state’s financing needs for the next three months, pending finalisation of a bailout that is not expected before March, when the new administration takes over.

At the end of each month we can evaluate our needs again, depending on how the previous month went, government spokesman Stefanos Stefanou said. “And as the finance minister said, we are on track regarding the obligations we have and our financing needs for April,” Stefanou added.

Speaking on state radio, Finance Minister Vassos Shiarly said the state will need €2.8 billion in the next three months – one billion being maturing debt that it hopes to roll over. “All this can be done without additional borrowing,” the minister said.

Cyprus’ request for a full bailout has apparently been caught in limbo due to disagreements between EU members. But the island has also had to contend with a discussion on how far Moscow should be involved in a bailout.

In an interview with the Associated Press, the finance minister said leaders from the other 16 EU countries that use the euro are in “high level” talks with Moscow about a contribution to the bailout and that a deal was “probable.”

“I think it's only a question of time,” Shiarly told the AP.

And last night the Kremlin said Russian President Vladimir Putin had a telephone conversation with his Cyprus counterpart Demetris Christofias, but gave no details. According to a laconic statement posted on the Kremlin’s website, the two presidents discussed current issues of bilateral cooperation, including cooperation in the economy and finance.

Government sources said last night that the call was made by Putin to Christofias, who is currently on an official visit to Serbia. Although the source could not give details, they said that obviously the two discussed the possibility of extending Russia’s €2.5 billion loan to Cyprus and Russia’s possible involvement in an international bailout of Cyprus. Christofias is expected to make an announcement today from Serbia regarding the phone discussion between the two leaders.

On Monday, Russian Prime Minister Dmitry Medvedev signalled his country’s willingness to help under certain conditions. The help could come in the form of an extension to a five-year €2.5 billion loan Moscow granted Nicosia in 2011.

Cyprus said earlier this month it had formally requested a five-year extension to repay that debt, a step that could take the immediate heat out of Nicosia's financial woes and that, according to a German government document, eurozone finance ministers support.

"We think the main burden to solve these problems should be taken on by Cyprus and the EU states," Medvedev told the German business daily Handelsblatt in an interview held on the sidelines of the World Economic Forum in Davos.

"But we are not refusing to help under certain conditions. The conditions must be agreed first. Before that, there can be no money from us," he added.

Source: Cyprus Mail

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