Cyprus says euro ministers to decide on bailout in Dec

Cyprus could agree to a bailout deal with euro zone finance ministers by mid-December and get a first tranche of funds to shore up its banks by the end of January, its finance minister said on Thursday.
The island, whose banks are heavily exposed to debt-crippled Greece, has been discussing aid conditions with the IMF and EU institutions since June. It could need up to 17.5 bln euros ($22.6 bln), equal to its entire annual economic output.
Finance Minister Vassos Shiarly told MPs a preliminary agreement had been reached with international creditors, which needed to be supplemented with a definitive assessment of the banks' recapitalisation needs.
That assessment will be ready by December 7, he told parliament.
"There is a preliminary deal with the troika," Shiarly said, referring to lenders from the International Monetary Fund, the European Central Bank and the European Commission. "(But) I anticipate discussions over the next few weeks will be difficult, perhaps more so than before."
The four-year bailout programme envisages heavy spending cuts, including to civil service wages and pensions, and it targets a primary budget surplus of 4.0% of GDP by 2016.
Shiarly said authorities were discussing an interest rate of 2.5% with lenders, which he described as "very good" under the circumstances.
Lenders say a final agreement cannot be reached until there is more clarity on the capital needs of the island's banks, which have announced 9-month losses of more than 2 bln euros this week.
Shiarly, speaking to House finance committee, said a working scenario was a conclusion on Cyprus by mid-December, with up to six weeks for a deal to be ratified by the national parliament. "That would bring us to the end of January for the first tranche."
Once agreed, the bailout would make Cyprus the fourth euro zone nation to get a sovereign rescue after Greece, Ireland and Portugal. Spain has been granted financial aid to recapitalise its banking sector, but Madrid has not so far asked for money to cover state needs.
Meanwhile, Central Bank Governor Panicos Demetriades also told deputies that a preliminary agreement with international lenders was the "best which could be achieved" under present circumstances.
"It is my conviction that faithful implementation of this agreement is a strong basis for gradually overturning negative developments occurring in the Cypriot economy in recent years as the result of the debt crisis in the euro zone," he said in a statement to parliament.