Brussels, 22/11/2012 (Agence Europe) - The Cypriot president, Demetris Christofias, announced in a press release on Thursday 22 November that Cyprus is very close to signing a draft agreement with the troika of lenders (the European Commission, the European Central Bank and the IMF) and agreement would be reached very soon on the few remaining items. AFP reports that Cyprus finance minister Vassos Shiarly spoke of aid amounting to €17 billion.
Sources at the ECB said on Thursday that the ECB delegation was due to leave Cyprus that evening but was unable to say whether a further mission would take place. A Cypriot source confirmed that the troika had left and said that they should have left Nicosia on Tuesday 20 November, but had had to stay on because of persistent disagreement and the continuations had gone on longer than expected, thus preventing Shiarly from attending the special Eurogroup meeting on Greece (see EUROPE 10735).
The same source says the Cypriot government was refusing to extend the retirement age to 67 (this extension is recommended by the troika) arguing that it would not create any jobs, but was prepared to raise it from 64 to 65. There is also disagreement about the recommendation to cut pension payments - not on the idea of reducing them, but on how to do it exactly. Cyprus is not happy about the troika's idea of privatising public companies and the two sides also disagreed on the use of profits from the granting of gas licences. Nicosia wanted the windfall to be used for growth stimulus, but the troika wanted it to pay off some of the public debt.
The Cyprus Mail newspaper says that the talks were heated, especially over the amount of financial aid needed (the troika says more will be needed than initially planned). Although the exact figure is not yet known, it will probably be in the teens (of billions of euros). The sum of €17.5 billion is being suggested, €10 billion of it to bailout Cypriot banks hit by the Greek crisis, €6 billion to service the debt and €1.5 billion to pay the state's bills. The uncertainty about the financial requirements is one of the reasons why Fitch ratings agency downgraded Cyprus on Wednesday from BB+ to BB-, adding a “negative prospect” to boot. The same source says that Cyprus may decide not to take up the offer of a Russian loan, but it depends on what it can negotiate from the EU. The Eurogroup meeting on 3 December will be discussing the Cypriot aid plan. (EL/transl.fl)