Christofias explains why Cyprus needs bailout loans

Cyprus President Dimitris Christofias announced on Tuesday evening that his government is close to reaching an agreement with the European Union for the Eastern Mediterranean country’s rescue from the financial crisis that he blamed on Cypriot banks.

“We have been obliged with pain in our soul to reach this decision,” Christofias said on Cyprus television, acknowledging that “there are many measures in the memorandum that are painful and their application will create problems for the people.”

He stressed that local banks lost 4 billion euros from Greek bonds and this must be covered by Nicosia.

“Since one of the major banks failed to be recapitalized within the time set by the EU, we had to resort to the mechanism. Up to 10 billion euros will go to the banks, and just 1.5 billion will go toward covering the state’s needs in the next four years. This shows that [the crisis] is the banks’ responsibility, but we cannot let them crumble as it would bring misery beyond description for the people.”

Earlier on Tuesday German Finance Minister Wolfgang Schaeuble told reporters in Brussels there is “lots of work to do” on a Cypriot package.

His French counterpart Pierre Moscovici said that if the International Monetary Fund does not take part in the Cypriot bailout, Russia could fill in, state broadcaster CyBC reported.

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