NICOSIA: Cyprus could default on loan payments due this month unless it can reach an agreement on a bailout with international lenders within days, a government official said on Monday.
"If in the coming days the state is unable to secure 250-300 million euros ($330-$395 million), then the state will proceed to default on payments," finance ministry official Christos Patsalides told a parliamentary committee.
Patsalides said the government had no "plan B" if it fails to reach an agreement on a bailout.
The cash-strapped government wants to dip into the pension and provident funds of semi-government organisations as it has nowhere to turn to secure such amounts on a short-term basis.
Employees of the telecommunications authority have protested against such moves as they fear they will not get their money back.
Patsalides said the government needed a total of 420 million euros to meet its needs but that 170 million euros had been secured from "external sources".
A troika of lenders -- the European Commission, European Central Bank and International Monetary Fund -- is reviewing Cyprus's request for EU financial aid which is expected to go before the eurogroup on January 21. But it would take weeks before Cyprus sees its first tranche of money.
An independent assessment is being carried out on how much the Greek-exposed banking system needs to boost liquidity. But the final report is due in mid-January, meaning extra funds must be found in the mean time.
The troika said good progress has been made but some adjustments are needed, and the amount Cyprus needs to borrow will determine whether that debt is sustainable.
Nicosia has pushed through a tough austerity measures to meet troika demands in making over a billion euros in cuts and savings. The four-year adjustment programme represents 7.25 percent of gross domestic product.
Parliament has approved public sector salary cuts ranging from 6.5 percent to 15.5 percent, a freeze on index-linked wages until 2016 and extended emergency salary contributions in the private and public sector.
Benefits have also been slashed while taxes on cigarettes, alcohol and petrol have all gone up.
Cyprus requested a bailout in June when its two largest Greek-exposed banks asked for assistance after failing to meet EU capital buffer criteria. It then nationalised the island's second biggest lender Cyprus Popular Bank after underwriting its 1.8 billion euro capital issue.
The money needed by Cyprus has been 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.
The country's entire GDP in 2011 was 17.97 billion euros and, according to 2013 budget projections, it is expected to shrink 2.4 percent this year to 17.85 billion euros.
indiatimes.com
"If in the coming days the state is unable to secure 250-300 million euros ($330-$395 million), then the state will proceed to default on payments," finance ministry official Christos Patsalides told a parliamentary committee.
Patsalides said the government had no "plan B" if it fails to reach an agreement on a bailout.
The cash-strapped government wants to dip into the pension and provident funds of semi-government organisations as it has nowhere to turn to secure such amounts on a short-term basis.
Employees of the telecommunications authority have protested against such moves as they fear they will not get their money back.
Patsalides said the government needed a total of 420 million euros to meet its needs but that 170 million euros had been secured from "external sources".
A troika of lenders -- the European Commission, European Central Bank and International Monetary Fund -- is reviewing Cyprus's request for EU financial aid which is expected to go before the eurogroup on January 21. But it would take weeks before Cyprus sees its first tranche of money.
An independent assessment is being carried out on how much the Greek-exposed banking system needs to boost liquidity. But the final report is due in mid-January, meaning extra funds must be found in the mean time.
The troika said good progress has been made but some adjustments are needed, and the amount Cyprus needs to borrow will determine whether that debt is sustainable.
Nicosia has pushed through a tough austerity measures to meet troika demands in making over a billion euros in cuts and savings. The four-year adjustment programme represents 7.25 percent of gross domestic product.
Parliament has approved public sector salary cuts ranging from 6.5 percent to 15.5 percent, a freeze on index-linked wages until 2016 and extended emergency salary contributions in the private and public sector.
Benefits have also been slashed while taxes on cigarettes, alcohol and petrol have all gone up.
Cyprus requested a bailout in June when its two largest Greek-exposed banks asked for assistance after failing to meet EU capital buffer criteria. It then nationalised the island's second biggest lender Cyprus Popular Bank after underwriting its 1.8 billion euro capital issue.
The money needed by Cyprus has been 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.
The country's entire GDP in 2011 was 17.97 billion euros and, according to 2013 budget projections, it is expected to shrink 2.4 percent this year to 17.85 billion euros.
indiatimes.com
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