NICOSIA, June 26 Cyprus, which became the fifth
euro zone country on Monday to seek emergency funding from
Brussels, may require a bailout amount worth up to half the size
of its economy, domestic media reported on Tuesday.
The Mediterranean island, with a banking sector heavily
exposed to debt-crippled Greece, said on Monday it was formally
applying for aid from the European Union's rescue funds.
Cyprus needs to plug a 1.8 billion euro - or 10 percent of
its GDP - regulatory capital shortfall in its second largest
lender by June 30. Potential aid could be more comprehensive to
cover fiscal requirements, Finance Minister Vassos Shiarly told
Newspapers reported that aid could be anything between 6 and
10 billion euros.
Cypriot newspaper Phileleftheros reported that required
funds were expected to exceed six billion euros, while the
Politis daily said some suggestions put the bailout amount at up
to 10 billion euros.
Either way, it would be a massive bill for Cyprus, whose
17.3 billion euro economy is the third smallest in the euro zone
after Malta and Estonia.
Cyprus is thought to have applied to the EU for aid after
exhausting attempts to secure loans from either China or Russia.
Those efforts, however, will be ongoing.
"We will continue efforts to secure a bilateral loan, which
can be used accordingly," government spokesman Stefanos Stefanou
Cyprus has been shut out of international capital markets
for more than a year, with yields on its 10 year benchmark bond
over 16 percent on Tuesday. Sidestepping EU aid earlier, it
secured a 2.5 billion euro loan from Russia in late 2011.
The loan amount is expected to cover needs in 2012, but not
in 2013, when Cyprus has 2.25 billion euros in refinancing,
including a euro medium term note (EMTN) redemption.
President Demetris Christofias, whose administration has
been slammed by opposition for dragging its feet in both
applying to the EU and taking measures earlier to shore up the
island's flagging economy, was to brief politicians later on
Christofias has been accused by the opposition of being out
of touch with reality and ignoring warning signs that the
economy was in trouble, suggestions the government strongly
The bailout request comes as Cyprus prepares to assume the
rotating EU presidency on July 1.
"It is a tragic coincidence," Cyprus Parliamentary speaker
Yiannakis Omirou told state radio.