Brussels, 04/07/2013 (Agence Europe) - In September, Cyprus should have received more than a third of the international aid granted by the eurozone and the International Monetary Fund (the troika) under the bailout agreed in March. On Wednesday 3 July, a European source said that eurozone finance ministers hoped to be able to decide on the payment of the next batch of aid at the Eurogroup meeting in September, following recommendations from the country's lenders, whose fact-finding mission will start in mid-July. Cyprus has already received €3 billion from the European Stability Mechanism (ESM) and €86 million from the IMF (of a joint total loan of €10 billion).
During their next fact-finding mission, the lenders hope to focus on the outcome of an assessment of Bank of Cyprus (BoC) assets, which should make it possible to decide what proportion of deposits at the bank (over and above the €100,000 guaranteed under the EU savings guarantee system) will be raided to restructure the bank. The ECB says this must be done as soon as possible. A Cypriot source says that the meeting on Wednesday between ECB representatives and the Cypriot government took place in a constructive atmosphere. The source said that the Cypriot authorities were putting all their energies into implementing the memorandum of understanding, and the ECB is prepared to see what it can do to help the BoC. The government says that the heart of the problem is the fact that BoC, the country's biggest bank, has to absorb Laiki's losses without the collateral for it.
A debt exchange at the start of the week will allow Cyprus to pay back €1 billion of bonds by 2016 held by national investors, which comes to maturity during the aid programming period (2013-2016). The success of the debt exchange caused Standard and Poor's on Wednesday 3 July to restore Cyprus' initial credit rating from selective deficit to CCC+, along with a stable perspective. Last week, S&P downgraded Cyprus after it announced the rollover, but said it would review the decision once the operation had been concluded. (EL/transl.fl)