Cyprus pleads for EU help as bailout approved

Cyprus has appealed to the EU for help in weathering a devastating economic crisis, as eurozone ministers approved a $13bn bailout for the nearly bankrupt island.

The appeal from President Nicos Anastasiades on Friday did not specify what he was seeking, but presidential spokesman Christos Stylianides made clear Nicosia was not looking for more money under the bailout programme.

The government “has not requested additional financial assistance under the memorandum with the troika,” Stylianides said in a statement, referring to the deal reached with the so-called troika of international lenders – EU, IMF and European Central Bank.

“What the president of the republic is discussing with European officials is the possibility of increasing European funds for growth and social cohesion.”

Stylianides said Cyprus would seek funds under the EU’s multi-annual financial framework 2014-2020 for member states suffering serious consequences from the euro crisis.

He said Cyprus is also looking for additional funding from EU social cohesion and rural development funds.

‘Reallocate structural funds’

Anastasiades said he had already spoken to EU Economy and Euro Commissioner Olli Rehn ahead of the ministers’ meeting in Dublin and was also writing to European Commission chief Jose Manuel Barroso and EU President Herman Van Rompuy.

“We will try to reallocate structural funds so that we can use them as effectively as possible to support the kind of economic activities in Cyprus that will help the country to return to recovery … for growing and investment and employment,” Rehn said.

Of the loan approved on Friday, $11.8bn will come from the eurozone and $1.3bn from the International Monetary Fund.

Cyprus will also have to come up with $17bn of its own, with the bulk of that sum coming from the closure of its Laiki bank and the restructuring of the Bank of Cyprus.

Cyprus will also raise taxes, cut spending and implement structural reforms to improve its public finances and to be able to eventually repay its debt, that is to fall to 104 percent of GDP in 2020 from a peak of above 126 percent in 2015.