Interest rate for Cyprus’ bailout loan expected at 2.5%, FinMin says

The interest rate of Cyprus` bailout loan is expected to be around 2.5%, Finance Minister Vassos Shiarly said on Wednesday.

Speaking before the House Committee on Finance, in Nicosia, where he presented the 2013 State Budget and the 2013-2016 Medium Term Fiscal Framework, the Minister also said he expected the discussion in the Eurogroup during the next few weeks on the approval of Cyprus` bailout agreement to be “as difficult as the process” of negotiations with the Troika.

He also noted that some draft bills, pertinent to the bailout agreement, need to be urgently discussed and ratified by the House of Representatives, before the Eurogroup meeting, to avoid possible problems by some Eurozone members.

Speaking in the presence of Cyprus Central Bank Governor Panicos Demetriades, Shiarly said that “the discussion at Eurogroup level is not an easy process”, adding that it may become even harder, in light of the agreement’s ratification process by national parliaments.

The first discussion, he went on, will take place during the December 3d Eurogroup session, where, as he said, he expected no decisions to be taken.

Another round of discussions on Cyprus, he noted, will take place on December 12-13, and the Cyprus memorandum is expected to be discussed next in the national parliaments, a process which can take approximately up to six weeks.

The first installment of the loan, according to Shairly should be expected by the end of January 2013, but some delay is possible.

The Finance Minister also said he was aware of the positions held by the member states, adding that he is in constant contact with them through diplomatic channels. He praised the “serious and responsible stance” which the Cyprus House assumed during the process, noting that it has been a decisive factor for the conclusion of the agreement with the Troika (European Commission, ECB, IMF).

The Government of the Republic of Cyprus 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.

The purpose of the required assistance is to contain the risks to the Cypriot economy, notably those arising from the negative spill over effects through its financial sector, due to its large exposure in the Greek economy.