Brussels, 04/03/2015 (Agence Europe) - The Cypriot finance minister, Harris Georgiades, has said that he would welcome a decision of the Eurogroup to convert the funds in the Cypriot bailout plan earmarked for bank recapitalisation and use them to service its debt.
“This would interest us as this wouldn't increase public debt, and would facilitate managing existing debt”, Georgiades said in an interview with the Cyprus Mail published on 3 March. “But our concern at this moment is to see the resumption of our programme (…). We would like to discuss this (the conversion of the funds: Ed) but it is not up to Cyprus or the troika (Commission, ECB and IMF) to decide, it is up to the Eurogroup”, he explained. When the results of the stress tests were published in October 2014, the Central Bank of the island declared that the billion available to the banks under the financial assistance plan would not be used and that the island's debt would be reduced accordingly (see EUROPE 11185). The director general of the ESM, Klaus Regling, said in the autumn that the ESM would be prepared to pay up to €1.35 billion to the island. In December, just €350 million was paid over, following the positive results of the stress tests. It is not entirely clear whether this is the money the minister was referring to in the interview with Cyprus Mail.
A Eurozone source predicted a lack of enthusiasm within the eurozone - which must give its agreement unanimously - for this money to be used for anything other than the banks, given the high level of toxic loans in the island's banks. It was also reiterated that it is now critical to renew the adjustment programme by implementing the law on property seizures, in order to allow the teams of the 'troika' to resume their monitoring mission, which was broken off in early February (see EUROPE 11248). (Elodie Lamer)