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RF, Cyprus Finance ministers to meet in Moscow on Wednesday

March 20, 2013, 4:02 UTC+3
The purpose of Sarris' visit is to hold talks with the Russian leadership on terms for the repayment of the credit granted by Russia in 2011
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MOSCOW, March 20 (Itar-Tass) – Cyprus Minister of Finance Michalis Sarris will meet with Russian Finane Minister Anton Siluanov here on Wednesday. "Such a meeting is scheduled for Wednesday," an official in the RF Finance Ministry press service told Itar-Tass on Tuesday.

The purpose of Sarris' visit is to hold talks with the Russian leadership on terms for the repayment of the credit granted by Russia in 2011, and to discuss the complex economic situation on the island.

The economy of Cyprus entered into a downturn streak by the middle of 2011. Three leading Cypriot banks – the Bank of Cyprus, the People's Bank, and the Hellenic Bank – turned out to be the holders of Greek state bonds. As a rsult of their writing off, the Cypriot banking sector lost 81 percent of the total amount of investmenets, which accounts for over 4billion euros, or 24 percent of the country's GDP.

In the autumn of 2011, Cyprus reached agreement with Russia to get an easy-term loan to fund debt liabilities. A credit of 2.5 billion euros was granted for a term of 4.5 years at 4.5 percent interest at annum (the first tranche was received on December 29).

In the opinion of the Cypriot side, the credit was to allow the coutry not to apply for financial assistance to the European Union and the International Monetary Fund. However, inJune 2012, Cyprus had to do exactly that (Cyprus became a fifth country of the Euro Area to request assistance from partners).

On March 16, 2013, the Eurogroup made a decision to allocate up to 10 billion euros to Cyprus (previously an amount of 17.5 billion euros was supposed to be provided). In the process, an unprecedented decision was taken to compel the depositors of Cypriot banks to finance the authorities' efforts to take the country out of the crisis. The holders of accounts are to pay various sums of money depending on the deposit'samopunt as a one-off anti-crisis levy. Such a measure is expected to draw approximately 5.8 billion euros, which will considerably reduce the debt burden and ensure the ability of Cyprus to repay its debts in the future.

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