MOSCOW - Russia said on Friday it would only grant a bailout loan to Cyprus as part of a coordinated rescue with the European Union for the Mediterranean island state, which it said was seeking a total of 20 billion euros ($25.7 billion) in aid.
Finance Minister Anton Siluanov told Reuters that Russia was
considering a request for a 5 billion euro loan, and added that
Cyprus was seeking a further 15 billion from the EU.
There was no immediate comment from authorities in Nicosia.
In June, Cyprus became the fifth country in the 17 nation
euro zone to seek some form of international aid, when its banks
needed state support to cover massive losses on their exposure
to debt-crippled Greece.
It has repeatedly said since that a bailout figure has not
yet been defined, and it was still in consultation with its
would-be lenders from the EU as well as the International
Monetary Fund.
Siluanov, who this week met Jean-Claude Juncker – the
chairman of the eurogroup of euro zone finance ministers and
prime minister of Luxembourg – estimated Cyprus’ total borrowing
needs at 15 billion euros.
This meant that, even if Cyprus borrowed from Russia, it
would still need EU assistance.
Siluanov’s comments appeared to represent an attempt to
prevent Cyprus – a popular offshore haven for Russian businesses
seeking protection from their country’s unpredictable investment
climate – from playing off Moscow against Brussels to secure
more favourable borrowing terms.
“If we give this credit for 5 billion euro, they still will
have to borrow somewhere else,” Siluanov told the Reuters Russia
Investment Summit in an interview.
“Therefore, the decision needs to be coordinated, because
our 5 billion is not enough for them; their (EU) 15 billion, in
principle, is sufficient.”
BAILOUT NEEDS
Ratings agency Standard and Poor’s has estimated that an EU
rescue package for Cyprus would exceed 15 billion euro – or more
than 80 percent of the country’s GDP.
European officials have said previously that Cyprus’s total
bailout needs could reach 10 billion euros.
Siluanov said that the main factor influencing Moscow’s
decision on the loan is whether Cyprus can service the loan and
eventually repay it.
“What will 5 billion euros give Cyprus? Will it allow to
solve its debt problems?” Siluanov said.
He also said five other European countries had asked Moscow
for financial help – roughly matching the number of countries
that sought aid from Russia during the 2008-2009 crisis.
“These are not large (countries),” Siluanov said, declining
to name any of them.
Russia, whose low sovereign debt is more than balanced by
its half a trillion dollars in foreign exchange reserves, has
been a favourite stopping-off point for finance ministers of
indebted countries laid low by the global financial crisis.
Russia has already lent Cyprus 2.5 billion euros.
But Moscow has generally resisted pleas for bilateral aid,
instead supporting steps to beef up the lending power of the
International Monetary Fund in return for a greater say in how
the global lender of last resort is run.
