Ministers finalise €10 billion Cyprus bailout

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.