Brussels, 28/06/2012 (Agence Europe) - The troika (European Commission, European Central Bank - ECB - and the International Monetary Fund - IMF) will be in Nicosia from Monday 2 July, ECB Executive Board member Jörg Asmussen told the Reuters agency on Wednesday 27 June. The team of future institutional creditors will assess the country's financial needs, in particular to recapitalise the Cypriot banks which are heavily exposed to the Greek economy and debt, and the conditions that will be attached to financial aid.
In a statement adopted on Wednesday, the Eurogroup welcomes the formal request by the Cypriot authorities for financial assistance from euro area member states and the IMF. It says that financial assistance will be provided “in the framework of a comprehensive adjustment programme”. On the same day, Cypriot European Affairs Minister Andreas Mavroyiannis said in an interview with EUROPE that the aid being sought would be mid-way between the aid requested by Spain and the full-scale bail-out of the Greek economy (see EUROPE 10643).
The Eurogroup says it is confident that the austerity programme agreed with Cyprus will “address the financial, fiscal and structural challenges of the economy in a decisive manner”. The programme will, it says, be based on: - “ambitious measures to ensure the stability of the financial sector” by addressing expected capital shortfalls and preserving the soundness of financial institutions, including restructuring and downsizing where needed (for example, the Cypriot Popular Bank will need €2 billion); - “determined action to carry out the fiscal adjustment”; - “structural reforms to support competitiveness and sustainable and balanced growth, “allowing for the unwinding of macroeconomic imbalances”. The Eurogroup will look to the specific recommendations which the Commission brought forward at the end of May and which the Council will approve this Friday. Among the recommendations are an increase in retirement age, more in line with life expectancy. Like Ireland before it, Cyprus is expected to argue hard for retention of its rate of company tax, which is among the lowest in Europe. The financial aid of between €5 billion and €10 billion, will be provided by the European Stability Mechanism, if it is in operation, or, if not, from the European Financial Stability Facility. (MB/transl.rt)