Cyprus to be sustainable with bank aid, says Shiarly

Cypriot Finance Minister Vassos Shiarly said rescue funds Cypriot banks will receive for their recapitalization are unlikely to make the government?s debt unsustainable, even as the bailout amount remains unspecified.

?In our calculations we believe that there is no such risk,? Shiarly, a former executive at Bank of Cyprus Plc, the country?s largest lender, said in an interview in Nicosia. ?The amount required is not likely to exceed the amount that will push us into areas of lack of sustainability.?

The East Mediterranean island?s finance minister said that there is no agreement yet with the so-called troika, of the European Commission, the European Central Bank and the International Monetary Fund, on the exact amount which Cypriot lenders will require for their recapitalization.

Shiarly said the amount needed which ?has not yet been specified or agreed? is still being discussed. He said the exact amount required to recapitalize banks is harder to determine than what the state needs in order to refinance existing debt.

Shiarly said the troika submitted to the Cypriot government in late July a ?rough proposal? of the bailout agreement which has been discussed throughout August with the international lenders. He said that while talks have made ?huge progress,? there are still areas to be resolved in the next two weeks before negotiations resume after September 17.

The benefits for Cyprus from a requested 5-billio-euro loan from Russia aren?t ?necessarily different from those that would be obtained from a troika loan,? Shiarly said. He added that Cyprus has not received confirmation regarding the loan from Russia, which would be the second after the governments in Moscow and Nicosia signed an agreement for a 2.5-billion-euro loan last year.

The discovery of natural gas in the island?s offshore territory in December will ?make a tremendous difference? in the future, Shiarly said.

?The mere prospect of gas coming onshore, even within the next five, six or seven years, is enough to give an impetus and hope that it will help Cyprus out of its financial difficulties,? he said. ?The current political difficulties with Turkey are not an obstacle to the exploitation of natural resources.? [Bloomberg]

Subscribe to our Newsletters

Enter your information below to receive our weekly newsletters with the latest insights, opinion pieces and current events straight to your inbox.

By signing up you are agreeing to our Terms of Service and Privacy Policy.