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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, meanwhile, that 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.

Anastasiades said the Eurogroup would on Thursday discuss ways to help Cyprus within the framework of the bailout memorandum of understanding (MoU), rather than renegotiation.

"The topics to be discussed are completely different (to any renegotiation) based on the content of the letter: That is to strengthen efforts for a recovery based on the memorandum," he told reporters on Wednesday.

His remarks came after government spokesman Christos Stylianides denied there had been any attempt to seek a renegotiation of the bailout.

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

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," said the spokesman.

"For the government, consistent and disciplined implementation of this MoU is what counts... 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," said Stylianides.

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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