Eurozone approves Cyprus bailout terms

DUBLIN, Ireland – Eurozone finance ministers formally approved on Friday, April 12, the terms of a Cyprus debt bailout, after some confusion over whether it needed revision, saying it could now go ahead once cleared by national parliaments.

Dutch Finance Minister Jeroen Dijsselbloem, head of the 17-nation Eurogroup, said the ministers “welcomed the staff level agreement achieved between Cyprus” and its international creditors, with the terms “fully in line with” a March 25 accord.

Earlier Friday, it had appeared that Cyprus wanted additional aid after the overall bailout cost increased to 23 billion euros from the 17 billion euros agreed last month.

Cypriot officials clarified that Nicosia was instead hoping to get other funding from the European Commission, such as in grants for infrastructure or other projects so as to support a besieged economy expected to shrink by 12.5% — or even 15% — in the next two years.

Under last month’s accord, Cyprus had to cough up 7 billion euros and its creditors — the EU, the European Central Bank (ECB) and the International Monetary Fund (IMF) — 10 billion euros.

However, because the economy is now expected to fare so badly, another 6 billion euros will be needed which Cyprus aims to find via an even more radical and painful restructuring of its bloated banking sector.

A Eurogroup statement said the approved bailout “is fully in line with the parameters and key objectives” agreed with Nicosia last month.

The Eurogroup noted with satisfaction moves to “address the fragile and unique situation of Cyprus’ financial sector,” while the overall agreement should allow the economy to “return to a sustainable path,” it said.

The first aid payment should thus be possible in May, it added. – Rappler.com