Sunday

25th Sep 2016

Ministers finalise €10 billion Cyprus bailout

  • Rehn (l) said the Cypriot economy could contract by '10-15 percent' (Photo: eu2013.ie)

Final agreement has been reached on a €10 billion bailout for Cyprus at a meeting of eurozone finance ministers in Dublin on Friday (12 April).

Under the terms of the deal, the €10 billion package will be composed of €9 billion from the European Stability Mechanism (ESM) and €1 billion from the International Monetary Fund.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

Speaking with reporters, EU economic affairs commissioner Olli Rehn admitted the bailout negotiations had been "a long and difficult process." He added that the EU executive was ready to "stand by the Cypriot people and support them through tough times."

Earlier, Cypriot President Nicos Anastasiades had made a plea for more assistance following reports indicating that the country would require a total package worth €23 billion, €6 billion more than the original figure of €17 billion. Anastasiades said he had spoken to Rehn and would also be writing to European Commission boss Jose Manuel Barroso and to European Council President Herman Van Rompuy.

"The letter to Mr Barroso and Mr Rompuy will refer to the need for EU policy to change towards Cyprus by giving it extra assistance, given the critical times we are going through as a result of the economic crisis and the measures imposed on us," Anastasiades said.

For his part, Rehn sought to clarify that the €17 billion would cover net financing needs, with the extra €6 billion including "additional buffers that have been factored in." He also confirmed that no extra funds would be offered to Cyprus.

However, Rehn conceded that the Cypriot economy could contract by up to 15 per cent in 2013. "I don't deny that there is uncertainty about the precise figure whether it will 10 percent, 12.5 percent or 15 percent," he said.

Ministers also agreed to extend the maturity date of loans to Ireland and Portugal by seven years.

Speaking with reporters, Eurogroup chairman Jeroen Dijsselbloem commented that Ireland was "a living example that adjustment programmes do work."

The Dutch finance minister also offered qualified praise for Portugal, calling on its government to "maintain momentum" of economic reforms after the country's constitutional court threw out a number of austerity measures as being unconstitutional.

He added that the Portuguese government was expected to agree a new programme with the international lenders within the coming weeks.

Cyprus is the first bailout to be dealt with exclusively by the ESM, the EU's permanent bailout fund.

The Mediterranean Island will be expected to repay most of its loans in fifteen years time and will receive its first tranche of funds in mid-May.

It is also set to benefit from a much lower interest rate than other crisis-hit countries.

Klaus Regling, managing director of the ESM, told reporters that the fund had had its "most successful week" after seeing its auction of €8 billion of five year bonds heavily oversubscribed at an interest rate fractionally above 1 percent and issuing €2 billion worth of ESM bills.

Investigation

Diesel cars still dirty, despite huge EU loans

The European Investment Bank lent billions to carmakers, in part to clean up diesel cars. But diesel cars are still dirty, prompting questions if the money was well spent.

EU redoubles attack on roaming charges

After an embarrassing U-turn last week, the EU commission has proposed to abolish roaming charges by June next year. Only "abusive" clients to pay.

Stakeholders' Highlights

  1. GoogleBringing Education to Refugees in Lebanon With the Clooney Foundation for Justice
  2. HuaweiAn Industry-leading ICT Solution Provider and Building a Better World
  3. World VisionUN Refugees Meeting a Wasted Opportunity to Improve the Lives of Millions of Children
  4. Belgrade Security ForumCan Democracy Survive Global Disorder?
  5. YouthProAktivEntrepreneurship, Proactivity, Innovation - Turn Ideas Into Action #IPS2016
  6. GoogleTrimming the Waste-Line: Weaving Circular Economy Principles Into Our Operations
  7. Crowdsourcing Week EuropeDon't Miss the Mega Conference to Master Crowdsourcing, Crowdfunding and Innovation! 10% Discount Code CSWEU16
  8. Martens CentreFighting Terrorism: Do we have what it takes? 26 September, Brussels
  9. ACCAKaras Report on Access to Finance for SMEs in a Capital Markets Union
  10. Centre Maurits Coppieters"I still believe we can change Europe" Said David Grosclaude
  11. World VisionThe Child Protection Index to be Launched in Brussels on 28 September 2016
  12. HuaweiDigital Transformation: Unleashing Europe’s Potential