The frontrunner in the election runoff for a new president this weekend said on Thursday he has been in touch with governments and unspecified funds for a bridge loan to ensure the island nation does not run out of cash before it secures an international bailout.
Conservative leader Nicos Anastasiades, who polled over 45% in last Sunday's first voting round and is the favourite to win the February 24 runoff, told Reuters in an interview that various parties, including "governments and funds" which he did not identify, had been "sounded out" for a short-term loan.
The "one or two month" loan would not supplant a bailout for which Cyprus is in talks with the European Union and the International Monetary Fund, he said.
"This would be in order to complete the (bailout) loan agreement with some comfort, without the threat or the fear of collapse," Anastasiades told Reuters correspondents at his party offices in Nicosia.
"That means not to be under the dilemma of a deadline," he added.
The 66-year-old lawyer declined to say whom he had contacted. It was the first time a presidential candidate in Cyprus has disclosed talks to secure a loan ahead of a bailout rescue - talks which have dragged on for eight months.
"We would want a very short period to study the (bailout) terms, to see how we could avoid distortions without dealing with the pressure of the state going bankrupt," said Anastasiades, who faces communist rival Stavros Malas on Sunday.
Malas, a pro-bailout but anti-austerity candidate who served as health minister in the outgoing administration lags Anastasiades by 18 points in opinion polls. He polled nearly 27% in the fuirst round, far below the communist Akel party’s average 30% voter strength.
The Socialist party Edek that endorsed a third candidate, Yiorgos Lillikas, in the first round has not backed either candidate, boosting hopes for the conservative chief known for his no-nonsense manner.
With Cyprus shut out of financial markets for almost two years, its outgoing leftist government has relied on short term and costly financing for months to meet its day-to-day needs, but has been critical of the banking sector, saying capitalists were to blame for all the ills of the Cyprus economy.
The island nation is badly in need of a bailout of up to 17.5 bln euros ($23 bln) - almost the size of its gross domestic product - mainly due to the devastating impact of a Greek debt restructuring on its outsized banking sector in early 2012.
Investors are closely watching the Cyprus bailout discussions amid fears that continued delays in clinching a bailout could hurt confidence in the euro zone just as fears of a Greek exit fade.
Although small compared to the rest of the euro zone economy, attempts by Cyprus to secure international aid have been bedevilled by concerns that the island is unlikely to be able to pay back a loan that dwarfs the size of its economy. Global bond trader Pimco was commissioned by the Central Bank of Cyprus to assess the recapitalisation needs of the banks, but has been criticised for the extremities in its worst-case scenario, possibly to help bail out the runaway public sector debt as well.
Anastasiades said recently speculated options to make debt manageable - from a sovereign debt writedown to imposing losses on depositors - were out of the question.
"Not only do I completely rule it out, I would consider it a devastating disaster to the economy," he said in a book-lined office, adorned by photos of his daughters and grandchildren.
"That would be a punitive measure, not a measure to save (Cyprus)."
Cyprus already has slapped pay cuts on an inflated public sector and tax hikes in anticipation of a bailout. Anastasiades said he did not favour conditions which were overly harsh.
"Our intention is to faithfully meet a loan agreement which will not provoke upheaval, or (include) unfair conditions from a negotiation made in haste under the pressure of time," he said.
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