CYPRUS: Close to bailout deal with EU/IMF lenders

Cyprus is close to agreeing a bailout package with the European Union and International Monetary Fund, President Demetris Christofias said on Thursday after the latest round of talks, despite saying a day earlier that he was "shocked" that the public debt adn bailout needs could reach 17.5 bln euros.

The island sought financial aid, expected to top 10 bln euros or 60% of its gross domestic product (GDP), from its European partners and the IMF in June after its banking sector was battered by exposure to Greece.

"After tough negotiations with the troika … we are very close to signing a memorandum," Christofias said in a statement from Brussels, where he is attending a two-day EU summit.

"Very few issues remain and it's possible that the gaps in these issues will be bridged very soon," he added.

A team from the troika of international lenders, including the European Central Bank, left the island on Thursday. They said in a draft statement seen by Reuters they had made "good progress" and that discussions aimed at "a potential programme" would continue from their respective headquarters.

The two sides have been at odds over a host of issues including privatisations, civil service pay cuts and pension cuts as well as the amount needed to recapitalise Cypriot banks.

A troika source told Reuters a debt sustainability analysis and financing needs still needed to be addressed.

A due diligence analysis on the state of the Cypriot banking sector is expected in time for Dec. 3, when euro zone finance ministers meet again in Brussels and aim to decide on a Cypriot programme.

The troika was initially due to leave Cyprus last weekend but stayed on to continue their talks.

"If the president says we're close, we're close," Finance Minister Vassos Shiarly who has been leading the negotiations, told parliament on hopes for a deal.