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Cyprus – Up a Creak with an 11 billion Euro Paddle

Violent protests, harsh austerity measures, reams of disappointing data, continuing uncertainty, nutters scaling historically important buildings… the Eurozone really has had to put up with a lot lately.

So wouldn’t it be nice if there was good news for even one member of the 17-nation currency bloc? Sadly, good news is thinner on the ground then snow in July.

Reliable but as yet unnamed sources have indicated that in order to pay its debts and recapitalize its banking system Cyprus will be requesting a 11 billion Euro bailout.

Back in June Cyprus had the dubious honour of joining the Eurozone bailout club, becoming the fifth country in the currency bloc to request financial aid – although no amount was settled on at the time.

The sources asserted that Cypriot Finance Minister Vassos Shiarly claimed that the nation’s banks needed fresh capital to the tune of 5 billion Euro’s despite the ‘troika’ of international lenders estimating the banks recapitalisation requirements to be closer to double that amount.

Shiarly was also credited with saying that if the Cypriot government is to cash in debt and seal the budget gap through the next two years they’ll need 6 billion Euro’s for the task.

Despite the fact that Cyprus is seeking a loan of 5 billion Euro’s from Russia’s first Deputy Prime Minister Igor Shuvalov, coming to an accord with the ‘troika’ regarding a bailout is becoming increasing important for the economic future of the nation.

A spokesman for the Cypriot government, Stefanos Stefanou stated yesterday that the Cabinet sanctioned a counter proposal which will be discussed by all interested parties prior to the resumption of rescue talks.

Although no date has been set for reopening negotiations with the ‘troika’ of representatives from the International Monetary Fund, European Commission and European Central Bank Shiarly did seem hopeful that bailout terms would be agreed upon by mid-November. He even told reporters that Cyprus could receive its first aid instalment in late December.


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