Cyprus prepares for second Troika visit

Cyprus President Demetris Christofias chaired a meeting with the Ministers of Finance, Trade and Labour, as well as the Central Bank Governor and some of his close advisors to review the situation of the economy prior to Monday’s second visit of a group of Troika auditors from the European Commission, the European Central Bank and the International Monetary Fund.
Government spokesman Stephanos Stephanou said "we discussed basic issues with regard to the Troika visit and the issues to be discussed in the consultations with the Troika delegation," he said.
On June 25, Cyprus applied for financial assistance from the EU bailout mechanism, as it needs 2.3 bln euros to recapitalise Cyprus Popular Bank and Bank of Cyprus and about 10 bln euros to pay down its runaway public sector debt. Cyprus has been excluded from international capital markets as of May 2011 while its sovereign rating has been downgraded to "junk" by all three rating agencies.
Denying there was problem with the state’s refinancing requirements, Stephanou said "the reason we applied to the mechanism is the situation in the banking sector and the recapitalisation of the banks. These funds do not exist and for that reason we applied to the bailout mechanism." He added that the Cypriot case is similar to that of Ireland, the second Euro area member-state to apply for EU financial support.
"We are in a similar position. Precisely because the Cypriot banks have been exposed to the Greek economy and the Greek government bonds and bearing in mind the large size of the banking sector, the problems of the banks naturally spill over to the economy."
Stephanou confirmed that Cyprus refinancing requirements amount to 4.46 bln euros for 2012-2014, as Finance Minister Vassos Shiarly told the parliamentary finance committee on Theursday.
"The 4.5 bln is the sum we need to cover the state’s refinancing requirements up to 2014," Stephanou said.
To question regarding an application for a second loan from Russia, Stephanou said that Nicosia has not yet received a reply by the Russian government. Moscow gave Cyprus a 2.5 bln euro loan that is expected to keep government coffers in the black to the end of the year. The Cyprus government is now asking for a second loan of about 5 bln euros to keep the state afloat and to pay its obligations, such as the civil service payroll and unpaid government contracts.