CYPRUS is looking to Europe, Russia and China seeking for the best terms for a €4 billion bailout package.
Deputy Europe Minister Andreas Mavroyiannis said that Cyprus needs €1.8 billion to recapitalise the Popular Bank within the next few weeks and that other banks may also need money. The Island could seek up to €4 billion in financial aid if it turned to the European Union for help.
During a visit to Ireland he said that no decision had been taken about how to bail out the Island’s banking system. But he said Cyprus could get help from Russia, China or both, and that their aid could even be mixed with European funds.
“Everything is on the table,” he said. “It can be a combination (of bilateral and European money). Whatever it is it will have a part of European – money or conditionality. I don’t know if it will be Russia or China,” he said.
Cyprus has been shut out of capital markets for more than a year, with many of its banks overexposed to the Greek debt crisis. It must find the equivalent of 10% of its gross domestic product by the end of this month to recapitalise Cyprus Popular Bank if no private investor is secured.
Mr Mavroyiannis said that borrowing money from the European Union (EU) carried baggage with it that bilateral loans did not.
“The problem with going through the (European bail-out) mechanism is that it received a very negative connotation because of what happened in Greece,” he said.
“Politically, when you say you are going into a mechanism people consider that there is something that is very negative. Politically, the government tries to avoid having to bear this negative effect.”
Nonetheless he said that Cyprus would stick to its EU obligations. “The money can come from outside, but you need to operate within the framework of the union,” he said.
Mr Mavroyiannis said that were Cyprus to tap the EU bail-out fund, it might ask, as a safety buffer, for more than the €1.8 billion it needs. “We are talking about €3 billion or €4 billion.”