Cyprus-Forum.com

[yialousa1971]

Russians expected to provide loan


By George Psyllides Published on September 10, 2011

FINANCE Minister Kikis Kazamias said yesterday that the government is negotiating a loan with favourable conditions as media reports spoke of some €2.5 billion either from, or set up through, the Russian government to refinance maturing debt and plug a deficit hole.

The minister said talks have been ongoing for several weeks and “we expect to arrive at an agreement soon, provided the proposal will be judged advantageous for the Cypriot side”.

Kazamias stressed that securing the loan would not change government plans to consolidate public finances

“A loan will not solve any fiscal or other problems in the public sector. It simply helps tackle cash flow issues easier,” the minister said.

The Politis and Phileleftheros dailies cited government sources as saying consultations were underway with Moscow but nothing had been finalised. Phileleftheros said the two sides were very close to a deal.

Yields on Cypriot bonds on secondary markets have surged in recent months after repeated downgrades of the euro zone minnow by ratings agencies concerned over fiscal slippage, and exposure of the island's banking sector to Greece.

Cyprus has around €1.0 billion in debt maturing in the first two months of 2012, and its current high yields have fanned speculation that the island could be a candidate for an EU bailout because its borrowing options seem limited.

Politis said the interest rate on the loan, which would be for up to five years, would be 4.5 per cent.

It would be used to cover liquidity and bond refinancing requirements over the next 18 months.

A 10-year bond issued to international investors in Feb 2010 was bid at 11.877 per cent on Friday, from around 6.20 per cent in early May.

“At this point we do not have the luxury to choose our financers, considering the situation in the international markets and the difficulties we face in selling government bonds,” Kazamias said.

Asked if the loan would come from the Russian government, a Russian bank or some other country, the minister said all three possibilities were open.

He said consultations were underway towards different directions.

Kazamias declined to say whether the most favourable conditions were offered by Russia while negotiations were ongoing.

He said Cyprus was negotiating “with more than one organisations”.

Main opposition DISY said this would be a positive development but warned against complacency. “This breather should not be perceived as a solution of the problems, halting the effort to consolidate public finances,” deputy chairman Averof Neophytou said.

The DISY official also struck a note of caution over the potential dependency on the lender.

“We want to believe there are no footnotes, asterisks and and other pledges, political or otherwise, connected with this possible borrowing,” Neophytou said.

Kazamias brushed off Neophytou’s concern, wondering, how much dependency was created through the billions of foreign deposits in Cypriot banks.

http://www.cyprus-mail.com/cyprus/russians-expected-provide-loan/20110910

[supporttheunderdog]

Well your friends the Greeks are not able to help us, indeed their problems are in part the cuase of some our problems, due to our *ankers having funded their profligacy.

We cannot blame it all on the Greeks as we do of course have our onw home grown problems, such as our our own money swallowing black hole called the Government and Civil Service. The only way out of the hole is to reduce public spending but with Commie Chris Toffee Arse at the helm sucking up to (or sucking-off?) the Trades Unions leadership the prospect of decisive action is remote.

[yialousa1971]

Thankyou Svetlana.