President Demetris Christofias has made it clear that he is not raising any obstacles in efforts to reach an agreement with the Troika (European Commission, European Central Bank and IMF) on a bail out package for Cyprus.
The President also said that neither the government nor the Troika have determined the real capital needs of the banking sector.
"We should stop sending messages to the European Union that Ministers are ready to sign a memorandum (with the Troika) but the President objects," he told in ex tempore remarks during an address at the Cyprus Investment Promotion Authority Annual General Meeting.
His comments came as Finance Minister Vassos Shiarly, while in Brussels to attend the Eurogroup and ECOFIN meetings, stated on Tuesday that he looks forward "to a good result by the end of the week," whereas Christofias himself has said that the Troika sets political terms which are difficult to accept.
In his remarks on the issue, Government Spokesman Stephanos Stephanou said yesterday that the Troika delegation, currently negotiating in Cyprus, is not authorized to reach an agreement on an adjustment programme as the real capital needs of the banking sector, which will determine the size of Cyprus public debt, have not yet been determined.
"The Troika delegation is in Cyprus without authorization to sign an agreement because the size of the recapilisation (of the banking sector) has not been determined," he said in his statements.
According to press reports, the Troika suggests that the recapitalisation of the Cypriot banking sector exceeds €10 billion which would, according to rating agencies, render Cyprus` public debt non-sustainable. The Cypriot government on the other hand suggests that the capital needs of the banking sector are estimated at €6 billion.
Reliable sources have told CNA that a report by Pimco, the firm which is currently carrying out a due diligence audit of the Cypriot banks and a representative sample of the cooperative credit institutions which will determine the final size of the recapitalisation of the banking sector, will issue a preliminary report to help reach convergence between the government and the Troika.
The same sources indicate that the Troika will demand privatization of lucrative semi-governmental organizations if the Cypriot debt is regarded non-sustainable.
Pimco representatives will present to Troika technocrats the figures they have gathered so far.
The Cyprus Ministerial negotiating group comprising Ministers of Finance, Commerce, Industry and Tourism, Labour, the Government Spokesman and Undersecretary to the President will meet today at the Central Bank to review meetings so far with the Troika mission in Cyprus.
Cyprus requested on June 25 financial support from the EU bailout mechanism to rescue its banking sector which suffered big losses following the Greek debt haircut and to cover its refinancing needs.
