NICOSIA- The government has asked for clarifications from the Troika (IMF, European Commission, ECB), on the extension of the adjustment programme period, Finance Minister Vasos Shiarly said.

Shiarly also said that a draft bailout deal with Troika is expected to be agreed within a month from now.

In addition, he said that the Government estimates that the final amount of the financial assistance from Troika will be much lower than the Troika estimates. He also dismissed comments that there has been a delay on the submission of a bailout request by theRepublic ofCyprus.

“There has been no essential delay”, he said, noting however that the time difficulties arose from the preparations, by the Ministry of Finance, for the Eurogroup and Ecofin meetings inNicosia, and the August holidays.

Replying to a question, Finance Minister stressed that it is not an easy case to negotiate a billion euro worth loan from Troika. “There are many issues that should be considered. The Mechanism that provide this loan, works with conditionalities. Therefore, it is not a usual procedure”, he added.

Shiarly estimated that during the coming period, probably during the next one month, as he said, the Republic of Cyprus will reach a draft bailout agreement with Troika.
Asked about the total amount of bailout, Shiarly avoided giving numbers. He noted, however, “the amount, whichCyprus is negotiating with Troika, is much lower than the one Troika has in mind”.

Replying to another question as to whether there is a huge gap between the government’s and Troika’s estimations on the amount, Shiarly said that there is a difference on the evaluation ofCyprus’ needs.

As he explained, Troika proceeds firstly with a top-down approach about the bailout’s total amount. After that, Troika proceeds with an estimation, based on a bottom-up approach. As he said, this approach usually reveals a much lower amount. This will probably be the case in Spain, where Troika initially estimated an amount of 100 billion Euro, and now is expected to readjust its estimation to a much lower amount.
Replying to another question, Finance Minister said that the government has asked from Troika to clarify, whether or not there is a possibility of an extension to the adjustment programme period.

The answer was that if there are special reasons for such an extension to be asked by a one country, this request will be examined without, however any commitment for fulfilling it. As he explained, the usual adjustment programme period lasts three years.
Asked if there is room for negotiations on the conditions and measures that Troika will ask fromCyprus to apply, in order to give the loan, Shiarly reiterated that it is not an easy case to involve in a negotiation for an economic assistance of billions of euro. He pointed out that bothCyprus and Troika retain very professional teams, which are dealing with that issue. “When you have two very good negotiation teams, you have good chances to achieve the target, and this target, at the end of the day, is that both sides will be satisfied with the agreement”, he added.

Shiarly stressed that the effort is to reach an agreement that will not only be viable, but will also have social coherence. “This is not an easy task to achieve because you have to take under consideration the social partners and the sensitivities of the people. At the end of the day, is the people that will need to make sacrifices, and not the Ministry of Finance”, he stressed.

The government of theRepublic ofCyprus informed on the 25th of June 2012 the appropriate European Authorities of its decision to submit to Euro area Member States a request of financial assistance from the EFSF/ESM.

A Troika mission (representatives of EU Commission, European Central Bank and IMF) was here in early July on a fact-finding mission for a close scrutiny of the banking sector, which has been severely hit by Greek sovereign debt haircut and over-exposure to the Greek economy, as well as the refinancing requirements of the Government. It returned toCyprus in late July for another week, to negotiate with the Government the bailout terms and conditions.

Consultations between the Government and the Troika continue with a view to conclude to a memorandum the soonest possible.