NICOSIA: President Demetris Christofias said on Thursday Cyprus is close to agreeing a bailout with international lenders, with the finance minister confirming that some 17 billion euros ($21.8 billion) is needed.
"After tough negotiations with the troika (of lenders), and keeping in mind the difficult circumstances this country is going through, we are very close to signing the memorandum with the troika," Christofias said in a statement after marathon talks on deep spending cuts and reforms to save its teetering economy.
"With the issues that remain, which are very limited, there is a possibility that very soon we can bridge those differences."
The statement, the president's first on the matter since the latest talks began on November 9, appeared to dismiss criticism he was not ready to agree to harsh terms.
Christofias sought to allay fears that officials from the troika of the European Commission, European Central Bank and the International Monetary Fund would leave the island empty-handed after more than two weeks.
The troika is expected to wrap up the talks on Thursday over what is needed to secure an agreement for EU financial aid.
Finance Minister Vassos Shiarly confirmed that reform of index-linked salaries, privatising the telecommunications authority and managing revenues from a major natural gas find were the remaining sticking points.
"We are on a very good road, and very soon we expect to make the final arrangement. There are only a few issues left, which we expect to cover very soon," he told reporters in Nicosia.
He said the memorandum could be ready for Eurogroup approval at its scheduled December 3 meeting.
Until Thursday, no official figure had been given, but it was widely reported to total 17.5 billion euros -- 10 billion euros for the banks, 6.0 billion euros for maturing state debt and 1.5 billion euros for public finances.
Shiarly said "the amount comes at around 17 billion euros ($21.8 billion). It's what we said in the past on the proviso the banks need 10 billion, which isn't our figure."
An independent audit of the banks' requirements is still underway, so the final figure for aid to the banks has not yet been announced.
The country's entire GDP in 2011 was only 17.97 billion euros.
The talks, which started in July, are the longest the troika has been involved in before agreeing terms, mainly because Cyprus is uneasy with the level of cuts and reforms.
Nicosia applied for bailout in June after its biggest lenders, Cyprus Popular Bank and Bank of Cyprus, could not meet new capital reserve limits because of exposure to Greece.
A document leaked to the media shows the government apparently proposing tax hikes and fewer cutbacks over a longer period than proposed by the troika.
Cyprus reportedly hopes to cut the debt gap by about 975 million euros by the end of 2016 rather than the 1.2 billion euros in mostly public finance cuts by 2015, as sought by the troika.
The troika's proposal is 80 percent through expenditure cuts and 20 percent from tax hikes.
It reportedly wants to slash the state payroll by 15 percent, shave 10 percent off welfare benefits, scrap the inflation-linked cost-of-living allowance and tax pension payments.
But the government has resisted, saying that would undermine an economy already in recession.
Cyprus proposes a two percentage point hike in value-added tax to 19 percent by 2014, a five-cent rise in excise duty on petrol and 150 million euros slashed off state benefits.
It has been unable to borrow on international markets since last year when credit rating agencies lowered its sovereign rating to junk status.
On Wednesday, Fitch downgraded debt issued by Cyprus by two notches, from "BB+" to "BB-" and said the outlook was negative, which means it could be cut further.
"A delay in negotiating official support has contributed to the deteriorating economic conditions and raised uncertainties about public sector reform and the correction of macroeconomic imbalances."
-AFP/ac
