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bailout terms, crisis, Cyprus, economy, finance minister Vassos Shiarly

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THE government said yesterday it aims to strike an agreement with its lenders on a bailout programme as soon as possible though the two sides disagree on the total amount -- Cypriot estimates being much lower.

“The amount we are negotiating with the troika is much lower than the one they have in mind,” Finance Minister Vassos Shiarly said yesterday, without however giving the government’s estimate.

“There is a difference in the assessment,” he told reporters during a news conference on the sidelines of the Ecofin meeting in Nicosia.

Cyprus applied for financial assistance from its EU partners and the IMF, the troika, in June. The troika submitted a 20-page document with their proposals at the end of July but Cyprus has yet to respond.

On Friday, Eurogroup President Jean-Claude Juncker said Cyprus and the troika will have to speed up the process as there is no time to lose – a clear suggestion there was a delay in the process.

After talks with main opposition DISY leader and presidential candidate Nicos Anastassiades yesterday, Juncker once again stressed the need to speed up the process.

“Everyone knows that urgent measures are needed in order to meet the expectations of the international community and of the financial markets,” he said.

Government spokesman Stefanos Stefanou reiterated yesterday that the administration was working on its counter proposals, which will soon be presented to political parties and the unions for discussion before submitting them to the troika.

“Certainly this must be done soon,” Stefanou said.

Shiarly said he expected an agreement with the troika within a month, a month and a half.

The government has not revealed its cards on how it would counter the troika’s proposals, which had a negative reception after they were leaked on Wednesday.

It does insist however that beyond austerity, there must also be stimulus, to avoid sinking deeper in recession.

“We want to have a plan that would not only be viable but it must also have social cohesion,” Shiarly said. 

He said the aim was to avoid a further increase in unemployment – currently over 10 per cent.

To mitigate the potential negative effects of an austerity programme, Cyprus has already sounded-out the troika on whether the standard three-year adjustment period could be extended to five.

“We have explored the possibility,” the minister said, but no formal request has been made so far.

European Economic and Monetary Affairs Commissioner Olli Rehn agreed that social cohesion is important.

“We feel that social fairness is a very important principle of European integration. It is a core European principle, so we see that as Cyprus is facing economic reforms and fiscal adjustment, it is very important to maintain social fairness. It’s a key principle to this process,” he said after meeting President Demetris Christofias.

But he tiptoed around a question on when he thought Cyprus and the troika might sign a deal.

“... we have been discussing about how to best overcome the economic challenges of Cyprus. The European Commission stands by Cyprus in these troubled times and we are in the negotiation process of how to overcome this difficult period,” he told reporters at the presidential palace.