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Cyprus expects Russia to extend loan to 2022

The Hague, January 31, 2013

Cypriot Finance Minister Vassos Shiarly said on Thursday he expected Russia to extend the maturity of a 2.5 billion euros ($3.39 billion) loan to his euro zone country to 2022 from 2016.

"We have been in touch with them. We have every indication, we hope extensions will be made to enable a sustainable debt," he told a Dutch parliamentary hearing in The Hague.

Shiarly appeared in parliament to address questions about a European Union bailout for the island.

"Provisions have been made for a bail-in, unfortunately, for junior bondholders. A very unhappy situation but out of necessity we have no choice," Shiarly said, referring to bondholders contributing to a bank rescue by writing down part of their debt.

Cyprus, one of the euro zone's smallest economies, applied for financial aid from the European Union and the International Monetary Fund in June last year after its banks reported significant losses on an EU-sanctioned write-down in Greek debt.

It is looking for 17 billion euros. Of that, Shiarly said, 10 billion euros would be used for banks and 6.5 billion to refinance debt.

Talks have been complicated by the fact the bailout would be the equivalent of the island's annual output, and by misgivings over potential sustainability.

Some euro zone member states, notably Germany, have also expressed unease at the island's close business ties with Russia and money laundering.

Cypriot President Demetris Christofias said on Wednesday Russia had issued assurances it would join in efforts to salvage the island's finances. – Reuters




Tags: Russia | Cyprus | debt | the hague | The Netherlands |

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