Already trying to distance itself from the harsh terms to which it agreed in return for a 10 billion euros ($13 billion) bailout from international lenders, Cyprus’ new government said it would seek a clause allowing for the removal of outside monitoring of its finances if it can find the money elsewhere to pay off the loans that could otherwise take years to settle.
That came as the International Monetary Fund, which along with the European Union and European Central Bank makes up the EU-IMF-ECB Troika putting up rescue monies, reportedly set harsh terms and fiscal targets to insure repayment.
Cypriot government spokesman Christos Stylianides said that President Nicos Anastasiades would try to insert a clause in the rescue deal according to which in the case that Nicosia finds the money to repay the loans it will borrow, it will be able to disengage itself from the European Stability Mechanism.
Averof Neofytou, the alternate President of Anastasiades’ governing party Democratic Rally (DISY) – who had agreed to the tough terms – apparently changed his mind a bit, saying that, “The Troika can go to hell once we have found the money we need.”
The German government, which is putting up much of the bailout, said it expects the memorandum of understanding between Cyprus and its prospective creditors to be ready by April 10, ahead of the Eurogroup meeting in Dublin on April 12 and 13: “There is no finished MoU on the table that we can evaluate,” stated German Finance Ministry spokesman Martin Kotthaus. “I expect that on April 9 we will have this whole package,” he said, adding that the German parliament could vote on the aid package in the week beginning April 15.
The package will include 1 billion euros ($1.27 billion) from the IMF, whose Managing Director Christine Lagarde said would help the struggling island’s economy to stave off collapse. “This is a challenging program that will require great efforts from the Cypriot population,” IMF Managing Director Christine Lagarde said in a statement.
“We believe that it provides a durable and fully financed solution to the underlying problems facing Cyprus and provides a sustainable path toward a recovery.” In a joint statement, Lagarde and European Union Economic and Monetary Affairs Commissioner Olli Rehn said they “stand by” Cyprus.
That came after Harris Georgiades, who was Alternate Finance Minister and Minister for Labor, was sworn in on April 4 as the new Finance Minister, replacing Michalis Sarris, who resigned after taking continued heat for caving in to Eurozone demands during negotiations whichh at one point saw the government agree to confiscate 6.75 percent of guaranteed bank deposits under 100,000 euros ($130,000.)
The government subsequently dropped that idea after it was rejected by the Parliament, 36-0, and is now seizing up to 80 percent or more of deposits over that threshold. Georgiades promised to do whatever the Troika told him.