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Cyprus talks to troika, no date set for return visit yet
September 17, 2012 / 9:03 PM / in 5 years

Cyprus talks to troika, no date set for return visit yet

NICOSIA, Sept 17 (Reuters) - International lenders discussing financial aid for Cyprus, battered by its financial exposure to Greece, will set the timing of their next visit to the island after consultations in coming days, its finance ministry said on Monday.

Finance Minister Vassos Shiarly had communication with the European Commission, the IMF and the European Central Bank - known collectively as the troika - on Monday evening, a statement from the finance ministry said.

Cyprus became the fifth euro zone member to seek financial assistance from its EU partners after its largest banks reported huge losses from Greek sovereign debt writedowns, forcing them to seek state aid to boost their regulatory capital.

In addition to seeking aid from its partners, Cyprus also asked for a 5 billion euro bilateral loan from Russia, a close political and economic ally. Moscow has yet to issue an answer.

“After today’s contact the finance ministry undertook, within coming days, to offer further information to some questions posed by the troika,” the statement said.

On the basis of those consultations, the troika was expected to decide when to next visit Cyprus, the finance ministry said.

Cyprus’s cabinet on Monday started discussions on the island’s 2013 budget, which is widely expected to incorporate spending cuts. The debate was scheduled to continue on Sept. 23, a government official said.

Cyprus sought EU and IMF aid in June to rescue its largest banks and assist it with fiscal challenges. Two rounds of talks with the troika in July were inconclusive.

Troika proposals to shore up the eastern Mediterranean island’s economy, the euro zone’s third smallest, have called for salary cuts in the public sector, pensions reform and privatisations.

Cypriot authorities are working on fiscal consolidation proposals of their own. Sources say they are expected to counter broad-based spending cuts with income-based staggered cutbacks over a longer time horizon.

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