Bloomberg News

Cyprus Government Seeks 2.5 Billion-Euro Loan From Russia

October 05, 2011

(Updates with comment from spokesman in third paragraph.)

Oct. 5 (Bloomberg) -- Cyprus said it’s ready to sign a deal for a 2.5 billion-euro ($3.3 billion) loan from Russia, helping the east Mediterranean island to control its borrowing costs.

The cabinet asked finance minister Kikis Kazamias to complete the deal, government spokesman Stefanos Stefanou said today in an e-mailed statement. The annual interest rate is 4.5 percent and it will mature in 4 1/2 years, Stefanou said.

“The Republic of Cyprus has a right to pay back the loan at an earlier stage without any additional charges,” he said.

The deal offers “significant benefits,” including covering short-term and medium-term financing needs and avoiding resorting to lending from domestic banks, the spokesman said.

The euro area’s third-smallest economy aims at slashing its deficit to 2.3 percent of the economy in 2012 from a forecast 6.5 percent this year, Kazamias said Sept. 28. Public debt is expected to climb to 65 percent of gross domestic product in 2011 and remain at the same level next year.

--Editors: Peter Branton, Tim Farrand

To contact the reporter on this story: Stelios Orphanides in Nicosia at sorphanides@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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