ECONOMY

Troika returns to Cyprus today for bailout talks

The troika of international lenders is due to arrive in Cyprus on Thursday to complete a draft agreement on a bailout deal to rescue the island?s recession-hit economy and Greece-exposed banks.

?The troika will arrive on Cyprus on Thursday with negotiations aimed at achieving agreement on granting a loan to Cyprus starting Friday,? government spokesman Stefanos Stefanou said in a statement on Wednesday.

Troika representatives have visited Cyprus twice since June, and the announcement ends speculation that they would stay away because of the government?s own countermeasures to the lenders? harsher austerity plan.

A document leaked to the media shows the government apparently proposing to raise revenue through more taxation and fewer cutbacks over a longer period than proposed by the troika.

No figure has been given as to how much Cyprus actually needs, but many experts believe it will exceed 10 million euros to prop up an 18-billion-euro economy. It hopes to cut the debt gap by slightly more than 1 billion euros by the end of 2016 rather than the 1 billion euros in mostly public finance cuts the troika seeks by 2015.

The proposal of the troika ? the European Commission, European Central Bank and the International Monetary Fund ? is 80 percent through savings in expenditure cuts and 20 percent via increased taxes.

The government?s proposed ratio is 60:40, including a two percentage point hike in VAT to 19 percent by 2014, a 5-cent rise in excise duty on petrol and 150 million euros slashed off state benefits.

[AFP]