Debt crisis: Cyprus 'very close' to signing bailout deal



Cyprus is "very close" to agreeing a bail-out package with the European Union and IMF (Other OTC: IMFAF.PK - news) , President Demetris Christofias said on Thursday, after the latest round of talks with the international lenders.

Sources told Reuters that an agreement was nearly done but would be completed only on Friday, when inspectors from the European Commission, European Central Bank and International Monetary Fund - together known as the troika - are likely to give their approval.

The Commission, asked about reports that a deal had been agreed, said it would only issue a statement on Cyprus on Friday.

"We will communicate on the outcome of the mission to Cyprus tomorrow," Commission spokesman for economic and monetary affairs Simon O'Connor said.

Mr Christofias, in Brussels for the EU leaders' summit, told reporters when asked about a deal with the troika: "We still work very hard."

The Mediterranean island sought financial aid - which could be up to €17.5bn, equal to its entire gross domestic product - from the European Union and IMF in June, after its banks were battered by their exposure to the Greek crisis.

"After tough negotiations with the troika ... we are very close to signing a memorandum," Christofias said in a statement. "Very few issues remain and it's possible that the gaps in these issues will be bridged very soon."

The troika team left Cyprus on Thursday. It said in a draft statement seen by Reuters that it had made "good progress" and discussions aimed at "a potential programme" would continue from their respective headquarters.

Cyprus and the troika have been at odds over a host of issues, including privatisations and pension cuts, as well as the amount needed to recapitalise the banks.

Cypriot government sources said the two sides had struck a preliminary agreement over a 17.5 billion euro bailout, although EU sources could not confirm the figures.

Two EU officials told Reuters the Cypriots had presented a final, detailed proposal including figures, and that the troika would examine it on Friday.

"We are very close, but there's no deal yet," one official said, speaking on condition of anonymity. "We will have more discussions on Friday and if all goes well, we will be able to finalise an agreement then."

A troika source told Reuters in Nicosia that a debt analysis and financing needs still needed to be addressed.

An analysis on the state of Cypriot banks is expected by December 3, when eurozone finance ministers meet again in Brussels and aim to decide on a programme for the government in Nicosia.

The troika was initially due to leave Cyprus last weekend but stayed on to continue the talks. The team is expected to return at a later date, a finance ministry spokesman said.

"If the president says we're close, we're close," Finance Minister Vassos Shiarly, who has been leading the negotiations, told parliament on hopes for a deal.

Source: Reuters

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