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Cyprus bailout cost jumps to 23 bn euros from 17.5 bn: Govt

AFP, Thursday 11 Apr 2013
Views: 739
Views: 739

Cyprus confirmed on Thursday that the cost of its EU-IMF bailout has surged to 23 billion euros ($30 billion) from 17.5 billion euros, putting the already teetering economy in danger of collapse.

"It's a fact the memorandum of November talked about 17.5 billion (euros) in financing needs. And it has emerged this figure has become 23 billion," said government spokesman Christos Stylianides.

The statement means Cyprus will now have to find 6.0 billion euros more than the 7.0 billion euros mooted when a preliminary agreement was reached on March 25 in order to secure an EU-IMF contribution of 10 billion euros.

"Who is responsible for this? How did we get here? It was the fear of responsibility and indecision of the previous government," Stylianides said in remarks to reporters.

Stylianides was responding to details of a new assessment of Cyprus' financing needs that eurozone finance ministers, including that of Cyprus, are to discuss in Dublin on Friday.

A copy obtained by AFP says the European Commission and European Central Bank estimate that "Cyprus's gross financing needs amount to about (23 billion euros) over the three-year programme horizon" through the first quarter of 2016.

"This includes needs for the recapitalisation of the banking sector, the redemption of maturing medium- and long-term debt, including loans and fiscal needs."

Stylianides did not say how Cyprus would raise that much money after having already committed itself to swinging austerity measures and a restructuring of the bloated banking sector that will is already hitting wealthier depositors.

However, he did respond to reports on Wednesday that Cyprus would sell 400 million euros of its gold holdings, a move the document shows to be part of the proposed financing package.

Stylianides said "the sale of gold is the responsibility of the central bank... That this is proposed by the European Commission in its assessment of the financial needs and the sustainability of the Cyprus economy is well known and apparent in European Commission documents. But again, it is the responsibility of the central bank."

"The Cyprus government certainly, in all its consultations to shape the memorandum, put forward such tools in order to make it possible to meet our financial needs. It is one of many, but the responsibility lies with the central bank."

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