NEW YORK TIMES
After Deal Fails, Cyprus Scrambles to Find Funds
By LIZ ALDERMAN and DAVID M. HERSZENHORN
— Cyprus’s three international lenders descended upon the presidential palace here Wednesday for discussions on whether and how a financial lifeline for the crisis-hit nation could be secured, as the country’s finance minister pressed his case in Moscow in hopes of securing further aid from Russia.
Petros Karadjias/Associated Press
Delia Velculescu of the International Monetary Fund,
right, and Isabel von Koppen Mertes of the European Central Bank, left,
are shown arriving at the presidential palace in Nicosia.
Multimedia
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The talks come a day after the Cypriot Parliament rejected a bill to
impose a tax on average depositors’ bank accounts as a condition for a
bailout deal.
The government, and even the Church of Cyprus, scrambled Wednesday to
come up with new ways to meet the demands of the three lenders — the
European Commission, the European Central Bank and the International Monetary Fund, known as the troika — to avoid an imminent collapse of its banking sector.
A deal must be reached by Thursday, the day that a bank holiday in
Cyprus is scheduled to end, according to the Cypriot central bank. In
case an accord is not struck, the Finance Ministry is preparing to order
banks to stay closed through at least next Tuesday.
European officials, and especially the European Central Bank, are
watching the situation with alarm, said one person with direct knowledge
of ongoing discussions, who was not authorized to speak publicly.
If a deal is not reached soon for a bailout that would support the
banks, or if Cyprus does not find funds through some other route in the
meantime, European officials fear that “the damage would be enormous,
and the country itself would be at risk of collapse,” the person said.
If that happens, the person added, officials are concerned that a clear
risk would arise that Cyprus could “go out of the euro,” creating “a
painful situation that would spur chaos.”
more continues:
http://www.nytimes.com/2013/03/21/business/global/after-deal-is-rejected-cyprus-scrambles-to-find-funds.html?pagewanted=all&_r=0
The troika of lenders is insisting that Cyprus come up with €5.8
billion, or $7.5 billion, of the €10 billion bailout negotiated last
weekend. The bank deposits tax, which Parliament voted down
overwhelmingly Tuesday along with the bailout plan, was part of that
bargain.
The finance minister of Cyprus, Michalis Sarris, met on Wednesday
morning with his Russian counterpart, Anton G. Siluanov, at the Russian
Finance Ministry, and in the afternoon for about 90 minutes with a
deputy prime minister, Igor I. Shuvalov, at the main government offices
in the Russian White House.
Emerging from the morning session, Mr. Sarris reported no progress. “We
had a very good first meeting — a very constructive, very honest
discussion. We underscored how difficult the situation is and we will
now continue our discussions to find a solution by which we hope we will
be getting some support from Russia.”
Russian officials would not immediately comment on the afternoon session
but said the meetings were done for the day. Russian leaders, including
President Vladimir V. Putin, had reacted furiously to the bank deposit
tax, which they said had caught them by surprise.
more continues:
http://www.nytimes.com/2013/03/21/business/global/after-deal-is-rejected-cyprus-scrambles-to-find-funds.html?pagewanted=all&_r=0
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