The government in Nicosia has confirmed that its funding gap has grown by around one third in recent months, now stretching beyond the country's annual economic output. Where the extra cash will come from is not clear.
The Cypriot government said on Thursday that it now needed to raise 23 billion euros ($30.1 billion) to shore up its balance sheets, as opposed to the previous figure of around 17.5 billion.
"It's a fact the memorandum of November talks about 17.5 billion [euros] in financing needs. And it has emerged this figure has become 23 billion," government spokesman Christos Stylianides said. The figure was also mentioned in a draft document obtained by several news agencies, with the funds designed to cover the country's obligations through the first quarter of 2016.
Stylianides attributed the increased requirements to "the fear of responsibility and indecision of the previous government."
According to CIA World Factbook estimates, Cyprus' total economic output for 2012 was around 17.9 billion euros.
An unusual rescue
Though not yet formally approved, Cyprus looked set to secure a set of emergency loans - typically called a bailout - worth 10 billion euros from European partners and the International Monetary Fund. The remaining sum, previously thought to total around seven billion, was the responsibility of the Cypriot government. Spending cuts, banking sector reform and funds taken from private bank savings accounts containing more than 100,000 euros are among the measures employed to raise the funds. The government in Nicosia is also planning to sell some of its gold reserves.
The unusual measure of seeking to tap private funds forced the Cypriot government last month to close the country's banks, fearing a run on deposits. Though reopened, some restrictions on withdrawals and transfers are still in force.
It was not immediately clear whether the fresh requirements would impact on the size of the international Cypriot rescue. In previous talks with Cyprus, its international creditors were keen to ensure that the country's banking sector - and wealthy non-European investors from countries like Russia that use it - played a meaningful role in plugging the country's financial shortfall. Cyprus' close economic ties with neighbor and ally Greece helped explain its banking sector difficulties.
Eurozone and EU finance ministers meet in Dublin on Friday aiming to finalize terms for the Cypriot rescue package.
International forecasts also estimate that the bank reforms and austerity measures are liable to send the eurozone's third-smallest economy into a deep recession.
msh/ccp (AFP, AP)