Nicosia to seek escape clause in bailout pact as IMF joins rescue

On the day that the International Monetary Fund agreed to participate in a funding package for Cyprus, the crisis-hit country saw the swearing-in of a new finance minister, while Nicosia pledged that it would try to insert a clause in its bailout agreement with its creditors for disengagement from outside monitoring once it has repaid its loans.

Cypriot government spokesman Christos Stylianides stated on Wednesday that President Nicos Anastasiades would try to insert a clause in the rescue deal according to which in the case that Nicosia finds the money to repay the 11.2 billion euros it will borrow, it will be able to disengage itself from the European Stability Mechanism.

Averof Neofytou, the alternate president of governing party Democratic Rally (DISY), struck a more populist chord yesterday, saying that “the troika can go to hell once we have found the money we need.”

Berlin expects the memorandum of understanding between Cyprus and its prospective creditors to be ready by next Tuesday, ahead of the Eurogroup meeting in Dublin on April 12 and 13: “There is no finished MoU on the table that we can evaluate,” stated German Finance Ministry spokesman Martin Kotthaus. “I expect that on April 9 we will have this whole package,” he said, adding that the German parliament could vote on the aid package in the week beginning April 15.

The package will include 1 billion euros from the International Monetary Fund, which announced its participation on Wednesday while expressing satisfaction with the content of the staff-level agreement with Nicosia.

“This is a challenging program that will require great efforts from the Cypriot population,” IMF Managing Director Christine Lagarde said in a statement. “We believe that it provides a durable and fully financed solution to the underlying problems facing Cyprus and provides a sustainable path toward a recovery.” In a joint statement, Lagarde and European Union Economic and Monetary Affairs Commissioner Olli Rehn said they “stand by” Cyprus.

This came after Harris Georgiades, until this week alternate finance minister and minister for labor, was sworn in on Wednesday morning as the new finance minister, replacing Michalis Sarris, who resigned on Tuesday.

He promised that the government will adhere to all the terms of the MoU.

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