Cyprus and the Troika mission (European Commission, European Central bank and the International Monetary Fund) could agree on a first draft memorandum, to govern the financial assistance to be given to Cyprus during their next visit to the island, Finance Minister Vasos Sharly, said on Monday.
In a press conference, Sharly said following the Troika second visit to Cyprus last July, consultations continued via teleconference, adding consultations are "in a very advanced stage."
He added that Troika`s next visit will be determined following the informal summits of Eurogroup and ECOFIN to be held in Cyprus on 14 and 15 September.
"At (the Troika mission) their next visit to Cyprus I believe we will be at such advanced stage to be able to agree on a first draft memorandum," he said.
Shalry assured that in the mean time Cyprus will address its short-term refinancing requirements until the coming October even is there a further delay in the final agreement over the memorandum with the Troika mission.
Furthermore, Sharly said the 2013 state budget will be submitted to the Council of Ministers on September 13, adding that the budget will present increased budget deficit.
"I am not in a position to say (exactly) but I anticipate that the budget deficit of 2013 will be relatively increased compared with the initial forecasts made in 2011," he said.
He noted that the 2012 budget deficit will reach 4.5% GDP due to the deterioration of the financial conditions both in Cyprus and worldwide, adding that the finance Ministry aims to submit a fiscal consolidation package aiming at reducing the deficit by 1% GDP (150-200 million EUR).
Without further elaborating, Sharly said the package will include "significant state expenditure cuts," adding that the package will be submitted to the Parliament for approval.
Sharly noted that the public finances are manageable even with a 3.5% deficit without the need for new loans.
On the request for a second bilateral loan agreement with Russia, Sharly said the request has been made, adding that his Ministry is ready to provide the Russian authorities any figures required.
"This (the loan) does not obstruct or hampers the process with regard to our application to the EU bailout mechanism in any way," he went on to say.
Cyprus which concluded in 2011 a 2.5 billion EUR with the Russian federation, has requested a new loan agreement. Excluded from the international capital markets as of May 2011, Cyprus on June 25 applied to the EFSF for financial assistance to bailout its two main banks, Bank of Cyprus and Cyprus Popular Bank, which have been severely hit by the Greek sovereign debt haircut and to cover its refinancing needs.
