Eurozone finance ministers meeting in Dublin have approved the terms for 10 billion euros in emergency loans for Cyprus. However, recent figures showed the island nation might need billions more.
Speaking on Friday, Eurogroup chief and Dutch finance minister Jeroen Dijsselbloem said the terms of the debt bailout had been approved, and could go ahead once it had been approved by national parliaments.
Dijsselbloem said the terms were "fully in line with" the agreement reached on March 25, and that finance ministers "welcomed the staff level agreement achieved between Cyprus and its international creditors." The so-called "troika" of the European Commission, the European Central Bank (ECB), and the International Monetary Fund (IMF) had set the terms for the existing deal.
The condition of Cyprus receiving the 10 billion euros ($13 billion) in emergency loans was that it needed to raise around seven billion euros by itself, which the government is trying to do through spending cuts, banking sector reform and dipping into bank accounts containing more than 100,000 euros.
Additional money needed
However, it is not yet known where a further six billion euros that Cyprus now expects to need will come from. On Thursday, government spokesman Christos Stylianides did not give a reason for the dramatic increase.
"The memorandum of November initially focused on 17.5 billion euros ($22.8 billion) in financing, but now it has reached 23 billion euros ($30 billion)," said Stylianides.
Germany said on Friday that the size of Cyprus' so-called bailout would not increase.
"The contribution from international creditors will not change," said German government spokesman Steffen Seibert at a regular briefing in Berlin, noting that a 10-billion-euro package was "already very large."
A first loan payment is due early in May, as Cyprus claims to need 75 million euros urgently to cover public-sector salaries.
The troika of the European Commission, ECB and IMF has presented a report predicting a deep recession for Cyprus, with its gross domestic product (GDP) expected to shrink by about 12.5 percent over the next two years.
Ireland, Portugal given extra time
The 17 eurozone finance ministers also agreed to give Ireland and Portugal an extra seven years to pay back their bailout loans, which they received to save them from default.
Dijsselbloem said ministers wanted to "make a definitive and positive" step, but added that the matter also had to be decided by finance ministers from the 10 EU countries that do not use the euro later on Friday.
EU Economy Commissioner Olli Rehn welcomed the decision on Ireland and Portugal, labeling it a "very important step" on the way to a full return to market financing for both countries.
European Central Bank officials will join the meeting in Dublin on Saturday.
jr/msh (dpa, AFP)