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Cyprus May Accept Bailout Even If Terms Are ‘Hard to Accept’

November 16, 2012

Cyprus may accept an international bailout even if the conditions are “hard to accept,” government spokesman Stefanos Stefanou said, with a possible cash crunch looming next month if aid is delayed.

Cyprus on June 25 became the fifth country in the euro area to seek a rescue, which will encompass the public sector as well as banks. One in two Cypriots believes the government should sign a deal for aid from the euro area and the International Monetary Fund, a poll by Cypronetwork for state-run broadcaster CyBC showed.

Any agreement is contingent upon the results of an audit to determine the recapitalization needs of Cypriot banks, which lost more than 4 billion euros ($5.1 billion) in Greece’s debt restructuring, Stefanou said today on Sigma TV. Preliminary results of the audit should be ready in the first week of December, he said.

Cypriot President Demetris Christofias said on Nov. 14 that the troika, comprising the European Commission, the European Central Bank and the IMF, was setting “political terms” in the bailout talks that were hard for the country to accept.

Stefanou today said that while the terms of an agreement may be “hard to accept, that doesn’t mean we won’t accept them.”

Central Bank of Cyprus Governor Panicos Demetriades has said an aid deal is needed “without delay.” Many of the country’s banks have seen deposits dwindle as uncertainty about the bailout and the country’s economy continues.

Bank Deposits

Cyprus Popular Bank Pcl, which was nationalised in May, saw its deposits decline to 10.2 billion euros at the end of September from 11.7 billion euros at the end of December, according to central bank data.

Total deposits in banks increased to 70.7 billion euros in September from 69.3 billion euros at the start of the year, though the gain came as deposits were increasingly shifted to non-Cypriot banks operating on the island, the data show.

The commission today said it’s pursuing an agreement with the Cypriot government on emergency aid and refused to speculate about whether a current negotiating mission will produce a breakthrough.

“We are taking forward discussions with them,” Simon O’Connor, a spokesman for the commission, told reporters in Brussels. “I can’t tell you how long this mission will last or whether there will need to be a subsequent mission. That depends on the progress in discussions.”

To contact the reporter on this story: Stelios Orphanides in Nicosia at

To contact the editor responsible for this story: Craig Stirling at

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