Cyprus
FinMin to seek extension to Russian loan
Cyprus
Finance Minister Michalis Sarris was headed to Moscow Tuesday to seek
an extension to an existing Russian loan, a top official said, as the
debt-hit island battles to stave off bankruptcy.
19
March, 2013
Finance
ministry director Andreas Charalambous told reporters in Nicosia that
securing an extension to the loan was «very important» as it would
throw Cyprus an economic lifeline.
"The
first issue is we have a large loan maturing in 2016 and if we manage
to come to an understanding this will help facilitate our debt
repayments and debt sustainability,» Charalambous told reporters.
"If
we manage to extend the loan the refinancing needs of the economy
would be manageable. So its very important."
"There
are other options the minister is going to discuss with the Russian
government and investors as our ambitions are going beyond the
extension of the loan. We will see if there is potential interest for
further investment,» Charalambous said without elaborating.
Moscow
extended Nicosia a 2.5-billion-euro loan in 2011 at a rate of 4.5
percent.
Sarris's
brief was to lower that rate and extending the loan's expiration date
until 2020 from 2016, media reports said.
Moscow
was reported to be seeking in exchange details about Russian
billionaires who held accounts on the island. Russia was also said to
be interested in buying a majority stake in Cypriot lender Patriot
Bank that is in need of rescue.
However,
the discussions could be awkward in the wake of a weekend
announcement that under the terms of a 10-billion-euro bailout for
debt-laden Cyprus agreed by EU leaders, a controversial levy will be
slapped on bank savings.
The
move has raised widespread anger in Cyprus, but also in Russia, where
investors have placed vast amounts of cash in the island's banks.
Estimates
vary but the Moody's rating firm estimates that Russian companies and
banks keep up to $31 billion in Cyprus. The figure accounts for
between a third and half of all Cypriot deposits.
Russian
President Vladimir Putin on Monday hammered the proposed tax as
«unfair, unprofessional and dangerous».
Russian
Prime Minister Dmitry Medvedev too slammed the harsh terms of the
deal.
"We
should say this directly: this simply looks like the confiscation of
other people's money,» Russian news agencies quoted Medvedev as
saying. «I do not know who the author of this idea is, but this is
what it looks like."
Several
analysts said the measure was meant to make sure that Brussels did
not spend billions propping up the at-times ill-gotten gains of rich
Russians, who are widely reported to have exploited Cyprus's
reputation as a tax haven.
Cyprus
has repeatedly denied the allegations of being soft on «dirty money»
and offered to open its accounts to international inspection.
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