Cyprus applying for bailout
Source: Agencies |
June 26, 2012, Tuesday
|
Print Edition
Print Edition
CYPRUS became the fifth eurozone country to seek financial assistance from the EU's rescue funds yesterday, announcing it was applying for a bailout for its banking sector hit by exposure to the crisis in Greece.
Cyprus needs to raise at least 1.8 billion euros (US$2.2 billlion) - equivalent to about 10 percent of its domestic output - by Saturday to satisfy European regulators about the health of the Cyprus Popular Bank, which saw its balance sheet hurt by bad Greek debt. It may seek more.
"The purpose of the required assistance is to contain the risks to the Cypriot economy, notably those arising from the negative spill over effects through its financial sector, due to its large exposure in the Greek economy," a government announcement said.
With its coffers emptying rapidly and hurtling toward an immovable deadline, the island suffered a further fiscal sovereign credit rating cut to non-investment, or junk, status by Fitch at BB+.
With a bailout widely viewed as all but inevitable, Cyprus has for weeks been trying to juggle its options between a bailout from Europe's rescue funds, the temporary EFSF and the permanent ESM, or a bilateral loan from either Russia or China.
Cypriot President Demetris Christofias is scheduled to brief political leaders this afternoon.
If Cyprus signs up for the EU rescue program it will join the ranks of Greece, Ireland, Portugal and Spain.
Christofias has been reluctant to accept the fiscal and regulatory conditions that might be attached to a European rescue.
Weekend trips by government officials to China suggested Cyprus was still holding out hope for a bilateral loan from a third country.
Commerce, Industry and Tourism Minister Neoklis Sylikiotis confirmed discussions in China were focused on a loan or a Chinese investment in the Cyprus Popular Bank.
"We have had some contacts... We have requested an answer in coming days," Sylikiotis said in comments to the state broadcaster.
Cyprus needs to raise at least 1.8 billion euros (US$2.2 billlion) - equivalent to about 10 percent of its domestic output - by Saturday to satisfy European regulators about the health of the Cyprus Popular Bank, which saw its balance sheet hurt by bad Greek debt. It may seek more.
"The purpose of the required assistance is to contain the risks to the Cypriot economy, notably those arising from the negative spill over effects through its financial sector, due to its large exposure in the Greek economy," a government announcement said.
With its coffers emptying rapidly and hurtling toward an immovable deadline, the island suffered a further fiscal sovereign credit rating cut to non-investment, or junk, status by Fitch at BB+.
With a bailout widely viewed as all but inevitable, Cyprus has for weeks been trying to juggle its options between a bailout from Europe's rescue funds, the temporary EFSF and the permanent ESM, or a bilateral loan from either Russia or China.
Cypriot President Demetris Christofias is scheduled to brief political leaders this afternoon.
If Cyprus signs up for the EU rescue program it will join the ranks of Greece, Ireland, Portugal and Spain.
Christofias has been reluctant to accept the fiscal and regulatory conditions that might be attached to a European rescue.
Weekend trips by government officials to China suggested Cyprus was still holding out hope for a bilateral loan from a third country.
Commerce, Industry and Tourism Minister Neoklis Sylikiotis confirmed discussions in China were focused on a loan or a Chinese investment in the Cyprus Popular Bank.
"We have had some contacts... We have requested an answer in coming days," Sylikiotis said in comments to the state broadcaster.
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