ECONOMICS > Eurozone countries accept Greek Cyprus bailout request

NICOSIA - The Associated Press

The eurozone accepts the upcoming EU term president Greek Cyprus’ plea for bailout money and will decide after a one-month study on the amount of the aid, an official says

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A man and a woman walk with their bikes by a storefront in Ledras Street in Nicosia. Greek Cyprus has become the fifth eurozone nation to ask for a bailout. AP photo

A man and a woman walk with their bikes by a storefront in Ledras Street in Nicosia. Greek Cyprus has become the fifth eurozone nation to ask for a bailout. AP photo

Officials from the European Commission, the European Central Bank and the International Monetary Fund (IMF) will begin assessing next week how much bailout money Greek Cyprus will need to prop up its banks and flagging economy, the country’s finance minister has said.

Vassos Shiarly noted that the eurozone group of nations had accepted on June 27 Greek Cyprus’ request for financial aid. He said experts from the so-called ’troika’ will carry out an in-depth study into the Greek Cypriot banking system and economy to calculate how much the country will need. He told a news conference that the study will take about a month.

EU welcomes aid request
The eurozone welcomed Greek Cyprus’ request for financial aid, saying that it is confident negotiated austerity measures “would address the financial, fiscal and structural challenges of the economy in a decisive manner and should allow Greek Cyprus to return a sustainable growth path.” In Washington, IMF chief Christine Lagarde said the fund is ready to join its European partners to help Greek Cyprus return to stable economic growth and restore its banking sector.

Shiarly played down concerns that the EU bailout fund will require the kind of punishing wage cuts, job losses and tax increases that Greece had to swallow in exchange for 240 billion euro ($300 billion) in bailout money.

“There will be some negative repercussions on our economy, but it’s not something that we cannot overcome,” he said. “The support that we will receive from the European mechanism will help us to not only deal with the banking problem, but it will also help us bolster the Cypriot economy and especially in generating growth.”

Greek Cyprus, which began using the euro in 2008, needs 1.8 billion euros ($2.25 billion) to help recapitalize Cyprus Popular Bank, its second largest lender that suffered the biggest losses from the writedown of Greek government bonds. But on June 27, Bank of Cyprus - the island’s largest - said it would ask the government for 500 million euros in “temporary support” to help it meet its own recapitalization targets.

Greek Cyprus needs the EU bailout fund because it cannot borrow from international markets due to prohibitive interest rates brought out by its junk credit rating status and a gloomy economic forecast that sees the country’s economy shrinking by a percentage point of gross domestic product this year before making a slight rebound in 2013.

The island has been surviving on a low-interest, 2.5 billion euros ($3.12 billion) loan from Russia this year, but that money is expected to run out by the end of the year.

Shiarly said Greek Cyprus will continue pursuing another bilateral loan from Russia or China.


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kerem atan

7/1/2012 1:09:08 PM

arthur nasso, you are good at distorting the subject. how can u relate an economic issue to the jailed journalists and honor killings. when it comes to the human rights and civilization u should also include the killings and massacres greek cypriots carried out against the Turkish cypriot community in the past .it was a total disgrace too! civilized greek cyprus is still hostile to the turkish at present.

john albay

7/1/2012 1:06:33 PM

@peter kyprios The greek occupied zone is Bankrupt and we Turkish cypriots get NO benifits from your zone as you block everything! Only some of us got EU passports as you dont reconise most of the TRNC citizens,what mega arrogance!@nasso yes it is a disgrace to ask for a loan and admit you are Bankrupt when you want to have the presidency of the EU.We Turkish cypriots are pleased we will soon be indipendant of the greek zone when we become part of Turkey or reconised by the muslim states.

Mr American

6/30/2012 8:45:08 PM

@arthur nasso , please rimind us again who keeps the trnc afoalt. It is totally supported by Turkey, not to mention the support the turkish cypriots recieve from the Greek cypriots in terms of free healthcare and E.U. benefits.

arthur nasso

6/29/2012 11:17:02 PM

so, being discraceful is asking for a loan but not jailing journalists, honour killings etc etc. be real or you come across as very bitter and silly

kerem atan

6/29/2012 3:59:48 PM

arthur nasso ,even if trn isnt recognized by eu ,it doesnt change the fact that greek cyprus is a disgrace.bailouts keep its economy afloat.greek cypriots were even indecisive about whether to ask for financial aids from russia, china or eu. another embarrassment is ,with its struggling and debt-hit economy ,greek cyprus takes over the eu presidency. Trnc is not recognized due to the policies of Eu. they treat Trnc as a ghost country and keep disowning it which wont get them anywhere...

arthur nasso

6/29/2012 1:17:15 PM

@JOHN ALBAY You seem bitter because they are in the EU and recognised as you are not? It seems that they have friends who do recognise them as a country/partner of the EU and who are willing to support their wellbeing( not to mention their other buddies ie Russia and Israel). I wonder if you also consider the other countries ie Portugal, Spain, Ireland,Italy etc a disgrace and the laughing stock of the EU because they are in financial difficulty. What wouldn't you give to be in their place?

john albay

6/29/2012 11:03:51 AM

So much for the greek cypriots puppet goverments lie that it is a rich stable country and we in the TRNC are poor and backward! What a disgrace that the greek occupied zone must beg for money when their moment (or 6 month) of glory as the EU president comes along,they are the laughing stock of the EU.The germans are right they are not fit to be the president of the EU they cant even get their puppet statelets finances in order. They should never have been put into the EU in the first place.
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