Cyprus says suggestions of a haircut on its debt are unfounded

NICOSIA Thu Dec 20, 2012 11:43pm IST

Related Topics

Priyanka Gandhi Vadra, daughter of Congress party chief Sonia Gandhi, adjusts her flower garlands as she campaigns for her mother during an election meeting at Rae Bareli in Uttar Pradesh April 22, 2014. REUTERS/Pawan Kumar

Election 2014

More than 814 million people — a number larger than the population of Europe — are eligible to vote in the world’s biggest democratic exercise.  Full Coverage 

NICOSIA (Reuters) - Cyprus dismissed as unfounded on Thursday any suggestion the IMF is seeking a writedown of the island's debt before it agrees to participate in a multi-billion euro bailout.

Finance Minister Vassos Shiarly was responding to a German media report that the International Monetary Fund had advocated a haircut on Cypriot bonds as a condition for IMF participation in an aid program for the euro zone member, which is heavily exposed to debt-crippled Greece.

"It is an unfounded allegation on which I do not wish to comment," Shiarly said.

"There is no issue of a haircut. These reports are allegations of a position allegedly taken by the IMF. The IMF has never made such a reference and it is unnecessary to even comment on it."

Cyprus, one of the smallest states in the euro zone, reached a preliminary deal with international lenders last month to get up to 17.5 billion euros in aid, equivalent to the entire annual output of its economy.

The bulk of that amount, or up to 10 billion euros, would go towards recapitalizing banks badly hit by a restructure of Greek sovereign debt earlier this year, according to the draft of the deal.

Germany's Suddeutsche Zeitung newspaper said on Thursday that the IMF was concerned about the sustainability of Cyprus's debt and wanted to see private sector involvement in dealing with it.

Shiarly said the level of aid to Cyprus would only be definitively clarified by mid-January, when consultants complete an assessment of the island's banking system.

"It would be premature at this stage to discuss an issue of debt sustainability or not," he said, adding he expected it to be discussed at a euro zone finance ministers' meeting on January 21.

Cyprus approved on Wednesday its 2013 annual budget which calls for sweeping spending cutbacks and tax increases. The island says it plans to save up to 1.3 billion euros over a four-year adjustment period as its part of the bailout deal.

Austerity measures will keep the island in recession through 2013, with the government forecasting the economy will shrink 3.5 percent in 2013 after an expected 2.4 percent contraction this year.

(Editing by Stephen Nisbet and Susan Fenton)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

RAINFALL THIS YEAR

REUTERS SHOWCASE

Election 2014

Election 2014

Thousands mob Modi as election race starts in Varanasi.  Full Article 

Monsoon Forecast

Monsoon Forecast

Met office rules out surplus monsoon in 2014.  Full Article 

Facebook's Performance

Facebook's Performance

Facebook Q1 revenue grows 72 percent on rising mobile ads.  Full Article 

Earnings Season

Earnings Season

Bharti Infratel Q4 net profit jumps 64 percent.  Full Article 

Solar Dispute

Solar Dispute

Green groups urge U.S. to drop solar trade case against India.  Full Article 

Oil Imports

Oil Imports

India to make May-July oil payments to Iran - sources.  Full Article 

Rice Exports

Rice Exports

India may cede top rice exporter spot under Southeast Asian price onslaught.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage