Eurozone finance ministers today reiterated that they will not give any more money to Cyprus.
The 17 finance ministers, meeting in Dublin, agreed that bail-out loans to Cyprus would not exceed the €10 billion agreed last month.
“It’s €10bn and that figure hasn’t changed,” Jeroen Dijsselbloem, the Dutch finance minister who chaired the talks, said after the meeting.
The decision by ministers to give formal approval to the bail-out came as Nicos Anastasiades, the president of Cyprus, suggested that he may ask for further help by way of the European Union’s structural funds.
Olli Rehn, the European commissioner for economic and monetary affairs and the euro, who attended today’s meeting, said that structural funds could be used but it would be separate from the main bail-out programme.
He said that there was a suggestion to “reallocate structural funds to use them as effectively as possible to help the country return to recovery, with investment and employment”.
Structural funds are paid out of the general EU budget and are mainly used for long-term infrastructure projects.
Rehn played down speculation that Cyprus’s financial needs were far worse than when the bail-out was agreed last week. A leaked document from the ‘troika’ of Cyprus’s international lenders – the European Commission, European Central Bank and International Monetary Fund – indicated that the black hole in the country’s finances was €23bn, €5.5bn more than was thought to be the case at the time of last month’s deal.
“People have been comparing apples with pears and coming up with oranges,” Rehn said.
“One is based on assumptions made several months ago, one based on recent decisions and macroeconomic forecasts.”
Above the €10bn pledged by the eurozone and the IMF, Cyprus must find the money to save its banking sector itself, through a combination of enforced losses on bank depositors, privatisations and – a recent suggestion – to sell off some of its gold reserves.
“Selling gold has always been an option put forward by the Cypriot authorities to meet financing requirements but it’s a decision to be made independently by Cyprus’s central bank, not a demand by the troika or the Eurogroup,” Dijsselbloem said.
Mario Draghi, the president of the European Central Bank, who also attended the finance ministers’ meeting, this week wrote to Anastasiades warning him not to sack the head of Cyprus’s central bank, Panicos Demetriades.
Demetriades has been widely criticised by members of Cypriot’s parliament for his part in the botched bail-out last month.
However, speaking after today’s meeting, Draghi said that the independence of the central bank needed to be safeguarded and warned that the European Court of Justice would ensure this was the case.
The eurozone’s finance ministers also gave provisional backing to giving Ireland and Portugal more time to pay back their bail-out loans. However, a final decision cannot be taken until it is endorsed by all of the EU’s 27 finance ministers. This should happen in Dublin later today or tomorrow morning.
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