Nicosia to ask for more help, but not money, from EU

Cyprus is considering putting EU structural funds to earlier use to help its stricken economy but is not asking for a bigger bailout from the euro zone and the International Monetary Fund than the agreed €10-billion, EU officials said on Friday.

Cypriot President Nicos Anastasiades told reporters in Nicosia on Friday that he would send a letter to European Commission President Jose Manuel Barroso and European Council President Herman Van Rompuy to give it extra assistance given the bad economic situation of the island.

That fuelled speculation on financial markets that the island may be pushing Brussels for more money under a bailout package which now shows Cyprus contributing almost twice as much in budget cuts and asset sales than originally mooted.

But euro zone finance ministers gave political backing to €10-billion ($13-billion U.S.) of loans for the Mediterranean island on Friday and said there were no plans or requests to raise that amount.

“The letter from President Anastasiades has nothing to do with asking for more money than the sum agreed in the MoU,” Brussels-based spokesman Michalis Koumides said.

“It is about a request for more support and financial assistance from our EU partners in the middle-term because of the financial and economic situation Cyprus is facing,” he said.

“For example, it asks about finding ways to use EU structural funds in better ways to help Cyprus,” he said.

The two international lenders have forecast Cyprus will contract almost 9 per cent this year and almost 4 per cent in 2014 before returning to growth in 2015.

Structural funds come from the long-term EU budget and are used to co-finance projects in less EU developed countries to help them expand economically.

The flow of such funds is spread over the seven years of the EU budget, but can be accelerated to increase the amount of money in the earlier years at the cost of the outer ones – this method has been employed to help Greece already.

“There is a big misunderstanding about this in the press this morning,” a European Commission official said.

“The Cypriots are asking for help in the form of technical assistance with structural funds absorption which is what we have committed to provide through the Task Force for Cyprus that is being established,” the official said.

“The program financing is up to €10-billion and everyone agrees on that including Cyprus,” the official said.


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