ECONOMY

Brussels lowers estimate of Cyprus financing needs to 21 bln euros

Cyprus’s estimated financing needs and the size of a bail-in by bank depositors were lowered as the euro-area nation seeks to tap fresh sources of revenue to stay solvent, a European Commission paper shows.

The document, dated April 12, shows that Cyprus’s government and the so-called troika of international assessors, including the Commission, see the island requiring 21 billion euros over the next three years, less than the 23 billion euros estimated in a March paper.

The new estimate shows a bail-in of bank deposits of 8.3 billion euros compared with 10.6 billion euros a month ago.

Cyprus is under pressure to reduce its financing needs as fellow euro-area governments harden their determination to limit rescue loans to 10 billion euros. Cyprus will make up the remaining 11 billion euros in asset sales, disposing of gold reserves, extending the redemption of government bonds and loans from Russia, the paper shows.

The latest financial plan is a “program envelope, which rests on plausible growth and fiscal assumptions, includes buffers in case of worse than expected macroeconomic and financial sector outcomes,” according to the paper, a copy of which was obtained by Bloomberg News.

Michael Grosse-Broemer, the chief whip of Chancellor Angela Merkel’s Christian Democratic bloc, said separately on Tuesday that Cyprus’s latest gross financing needs are 21 billion euros, without providing further details.

Germany’s parliament will vote on the aid package in the lower house in Berlin tomorrow.

[Bloomberg]