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Cyprus not seeking to renegotiate bailout

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(Globalpost/GlobalPost)

Cyprus denied on Wednesday that it is trying to wriggle out of bailout commitments after President Nicos Anastasiades wrote a letter to international lenders criticising the terms of the deal.

The European Commission said it had set up a support group for Cyprus, three months after the island secured a 10-billion-euro ($13 billion) EU-IMF bailout in exchange for breaking up its bloated banking sector.

"For the government, there is no issue or question of renegotiating the (bailout) memorandum. To the contrary," government spokesman Christos Stylianides told reporters.

He said the letter to the European Commission, European Central Bank and International Monetary Fund, which was leaked this week, "does not refer to such a thing".

"For the government, consistent and disciplined implementation of this MoU (memorandum of understanding) is what counts and this is the best and fastest way to exit of the memorandum and the loan agreement," said Stylianides.

"Putting forward some practical difficulties and seeking collective solutions with our partners within the European institutions in no way means refusal to implement the agreement.

"There is no issue, under any circumstances, of renegotiating the memorandum."

In his letter, Anastasiades sharply criticised the terms imposed for the March debt bailout and pleaded for help in safeguarding the island's biggest lender, Bank of Cyprus.

In return for the bailout, international creditors demanded the winding up of the Mediterranean island's second largest banker Laiki and a haircut on BoC deposits of more than 100,000 euros.

The government also had to raise taxes and reduce spending.

The conservative president said the haircut had been "implemented without careful preparation".

He also said that capital controls, which have yet to be fully lifted three months after they were imposed to head off a bank run, were "seriously hampering the conduct of business".

"An alternative, longer-term, downsizing of the banking system away from publicity and without bank runs was a credible alternative that would not have produced such a deep recession and loss of confidence in the banking system."

The European Commission said the new support group would "provide technical expertise to underpin the implementation of the economic adjustment programme".

It would also "help to alleviate the social consequences of the economic shock by mobilising EU funds and support the Cypriot authorities' efforts to restore financial, economic and social stability".

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http://www.globalpost.com/dispatch/news/afp/130619/cyprus-not-seeking-renegotiate-bailout