Sunday

22nd May 2022

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.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

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.

Cyprus economy to shrink 12.5% despite EU bailout

Cyprus' economy will shrink by 12.5 percent and its government needs to sell part of its gold reserves in order to meet the conditions of an EU-IMF bailout, a leaked paper says.

Bundestag likely to approve Cyprus bailout

The German parliament is likely to approve Cyprus' bailout programme despite concerns over a widening funding gap and growth projections which may prove too optimistic.

Commission grilled on RePowerEU €210bn pricetag

EU leaders unveiled a €210bn strategy aiming to cut Russian gas out of the European energy equation before 2027 and by two-thirds before the end of the year — but questions remain on how it is to be financed.

News in Brief

  1. UK to send 'hundreds' of migrants to Rwanda each year
  2. Norwegian knife attacks were domestic dispute
  3. Sweden hits back at Turkey's 'disinformation' in Nato bid
  4. Germany's Schröder gives up one of two Russia jobs
  5. G7 countries pledge €18bn in financial aid for Ukraine
  6. Italian unions strike in protest over military aid for Ukraine
  7. Russia cuts gas supply to Finland
  8. Half of Gazprom's clients have opened rouble accounts

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic delegation visits Nordic Bridges in Canada
  2. Nordic Council of MinistersClear to proceed - green shipping corridors in the Nordic Region
  3. Nordic Council of MinistersNordic ministers agree on international climate commitments
  4. UNESDA - SOFT DRINKS EUROPEEfficient waste collection schemes, closed-loop recycling and access to recycled content are crucial to transition to a circular economy in Europe
  5. UiPathNo digital future for the EU without Intelligent Automation? Online briefing Link

Latest News

  1. What Europe still needs to do to save its bees
  2. Remembering Falcone: How Italy almost became a narco-state
  3. Economic worries and Hungary on the spot Next WEEK
  4. MEPs urge sanctioning the likes of ex-chancellor Schröder
  5. MEPs call for a more forceful EU response to Kremlin gas cut
  6. Catalan leader slams Pegasus use: 'Perhaps I'm still spied on'
  7. More EU teams needed to prosecute Ukraine war crimes
  8. French EU presidency struggling on asylum reforms

Join EUobserver

Support quality EU news

Join us