BUSINESS

Cyprus doesn’t see new bailout to fund peace deal

TAGS: Cyprus, Economy

Cypriot President Nicos Anastasiades said on Thursday he did not expect Cyprus would need a new international bailout in the event of a peace agreement which would reunify the island,split by a war in 1974.

Speaking at a news conference in the Cypriot capital Nicosia, Anastasiades said the potential benefits of a Cyprus settlement could be huge.

The International Monetary Fund and the World Bank are now carrying out studies into the matter, he said.

“I don't see how it would be possible for us to be led into to a new Memorandum of Understanding, if one takes into account there will be transitional periods and safeguards built in (to a solution) so there will be no economic oscillations,” he said in response to a question.

Cyprus exited a three-year bailout program on March 31.

“In any case, from the first day of a solution - and I hope that will be the soonest - the common currency will be the euro,” Anastasiades said.

Cyprus was divided after a Turkish invasion in 1974 following a brief Greek-inspired coup, and the island's Greek and Turkish Cypriot communities remain separated.

The Greek Cypriot side, which represents the whole of Cyprus in the European Union, has been a member of the euro zonesince 2008. North Cyprus, a breakaway Turkish Cypriot state, has as its official currency the Turkish lira.

Anastasiades represents the Greek Cypriot community in peace talks with Mustafa Akinci, the Turkish Cypriot leader. Diplomats say the negotiations represent the best chance in years to settle the conflict.

Cyprus received a 10 billion euro international bailout in 2013, but only used about 70 percent of the cash.

The financial lifeline extended by the EU and the IMF was contingent on Nicosia imposing a 'bail-in' on deposits – a raid on people's savings which were then converted to equity – to recapitalize banks badly exposed to debt-stricken Greece.

[Reuters]

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