Cyprus bailout draft links recovery to gas reserves

A draft bailout agreement between Cyprus and the troika, which was published in the Cypriot daily Phileleftheros on Monday, foresees the exploitation of offshore hydrocarbon deposits as part of an economic reform program aimed at putting the country back on the path to fiscal health.

The plan set out in Phileleftheros envisages the creation of infrastructure to exploit undersea reserves and of a fund that would manage state revenues derived from natural gas finds. It also gives Nicosia one more year than anticipated to post a primary surplus – setting a deadline of 2017 rather than 2016.

As details of a memorandum signed between Nicosia and troika officials were leaked to the media, a Cypriot minister said that the center-right administration was considering the possibility of reaching out to political rivals, communist-rooted AKEL and socialist EDEK, to form a “national unity government.” “We are in a state of emergency,” Transport Minister Tasos Mitsopoulos told the Athens-Macedonian News Agency on Monday.

As expected, Nicosia’s agreement with the troika foresees tax hikes and wage cuts. Less predictably, Cyprus President Nicos Anastasiades said he would allow casinos to operate in Cyprus, as they do in the Turkish-occupied north of the island.

Separately, the president refuted reports that a firm owned by his son-in-law’s father transferred 21 million euros abroad a few days before a Eurogroup decision on March 16 to impose a levy on depositors in Cyprus.

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