Troika begins talks with Greek Cyprus

Troika begins talks with Greek Cyprus

NICOSIA - Agence France-Presse
Troika begins talks with Greek Cyprus

Bembers of potential lenders walk toward the Greek Cypriot Finance Ministry. AP photo

The troika of international lenders began talks with Greek Cyprus, the current holder of the EU’s six-month rotating presidency, on Nov. 9 to seek a draft agreement on a bailout deal for the financially beleaguered Mediterranean island.

A troika delegation was at the finance ministry to thrash out the extent of public sector cuts required in return for much needed financial aid.

The officials are expected to remain on the island until next week.

But state radio said it may not be the last visit by the troika -- the European Commission, the European Central Bank and the International Monetary Fund -- as it could take longer to work out how much the Greek-exposed banking sector needs to recapitalize.

Greek Cyprus applied for an EU bailout in June after its biggest lenders, Cyprus Popular Bank and Bank of Cyprus, could not meet new capital reserve limits because of huge losses from their exposure to bailed-out Greece.

A finance ministry statement said on Thursday that the issues to be discussed include structural matters, the macroeconomic framework as well as issues related to Greek Cyprus’s financial sector.

The continuing negotiations will be aimed at “achieving convergence,” it said, Eurozone member Cyprus has the unenviable tag of being the first country to hold the bloc’s six-month rotating presidency, which it assumed on July 1, while also negotiating EU emergency aid.

A document leaked to the media shows the government apparently proposing to raise revenue through more taxation and fewer cutbacks over a longer period than proposed by the troika.

No figure has been given as to how much Greek Cyprus actually needs, but many analysts believe it will exceed 10 billion euros ($12.7 billion) to prop up an 18-billion-euro economy.

It hopes to cut the debt gap by slightly more than one billion euros by the end of 2016 rather than the one billion euros in mostly public finance cuts the troika seeks by 2015.

The troika’s proposal is 80 percent through expenditure cuts and 20 percent from increased taxes.

EU begins tough 2013 budget talks

BRUSSELS – Agence Fraence-Presse

Senior European officials went into tough talks on Nov. 9 on the EU’s 2013 budget, hoping for an accord which could help pave the way for agreement on the bloc’s even more hotly disputed 2014-20 spending plans.

The negotiations could be prolonged, with no guarantee they will produce a working compromise as major net contributors, led by Britain, seek sharp cuts at a time when governments are having to reduce spending and impose austerity.

The European Commission and Parliament meanwhile are sticking to their guns, seeking a 6.8 percent increase to 138 billion euros for 2013 in order to bolster growth and jobs in a sharply slowing European economy.

Greek Cyprus, in the chair for the talks, warned that “today we’ll have a long day and possibly a long night.” Last month, British Prime Minister David Cameron threatened to veto the 2014-20 budget at the November 22-23 summit if Brussels insisted on an increase of 5 percent to around 1 trillion euros.