The Russian government has approved President Vladimir Putin’s pledge to restructure an existing loan to Cyprus, the finance ministry spokesman told Dow Jones Newswires Friday.

Cyprus had requested an extension of the 2011 loan, which falls due in 2016, asking for a reduction in interest to 2.5% from 4.5%.

Negotiations between Moscow and Nicosia failed when the Cypriot delegation met Russian officials in March, seeking much needed financial aid from the world’s leading oil and gas producer. But Mr. Putin said later in April that Moscow would restructure the 2.5 billion euro ($3.31 billion) loan. The finance ministry said back then that it was ready to comply with conditions requested by Cyprus but it needed time to see how the Mediterranean island is addressing its financial issues.

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