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IMF seeks 'durable solution' to Cyprus problems

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(Globalpost/GlobalPost)

The International Monetary Fund wants to find a "durable solution" to the economic problems in Cyprus, particularly in its banking sector, a spokesman for the global crisis lender said Thursday.

"IMF staff are working with the Cyprus authorities, as well as as with our partners the European Commission and the central bank, to develop a durable solution to Cyprus banking sector problems... consistent with debt sustainability," Fund spokesman Gerry Rice said at a news conference.

"Preserving financial stability in Cyprus and the eurozone are essential," he added.

Cyprus, which is heavily exposed to Greece's public debt crisis, has said it needs roughly 17 billion euros ($23.1 billion) of aid.

The eurozone member has been in discussions with the so-called "troika" of international lenders -- the IMF, European Union and European Central Bank -- since June about a lifeline after its two largest banks sought assistance due to exposure to toxic Greek debt.

Talks currently are bogged down notably because of Cyprus's refusal to begin recommended privatizations. The European Union has postponed a deal until after Cyprus's presidential election next month.

Germany has cast doubt over the bailout, criticizing Cypriot banks as being havens for tax evaders and money launderers for Russian oligarchs.

According to the IMF spokesman, the slow pace of discussions did not endanger the country's financial position.

Nicosia has requested a five-year delay on repaying a 2.5 billion euro loan from Russia received in 2011.

Rice said that a rescheduling of the Russian loan repayment would be "very helpful" to improve Cyprus's financial situation.

He added that discussions on Cyprus were expected to continue during the coming weeks.

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http://www.globalpost.com/dispatch/news/afp/130131/imf-seeks-durable-solution-cyprus-problems