Russia turns down Cyprus 5 billion bailout request - open to a " coalition of the willing " but not going to hang out their by themselves and then only after Europe steps up to the plate......By the way , let's not knock Cyprus too hard - they are doing the same ponzi accounting and borrowing schemes that the US will start at the end of this month now that th US is about to hit its latest but not last debt ceiling.....

http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_26/12/2012_475945

Russia: Loan to Cyprus too risky for just one creditor Russia has no plans to grant a 5 billion-euro loan requested by Cyprus because the risks are too great to be assumed by a single creditor, Deputy Finance Minister Sergei Storchak said on Monday. “We have no specific plans or instructions to do so,” Storchak said in an interview in Moscow. “It’s obvious that no single creditor can work with Cyprus alone,” he said. “Anyone who steps up on an individual basis to finance that country’s government or to help recapitalize its banks would be taking an enormous risk.” Cyprus, whose public debt is forecast to reach 89.7 percent of gross domestic product this year, in late June became the fourth euro-area nation to request a financial rescue since a 2010 bailout of Greece. In addition to seeking aid from its euro-zone partners and the International Monetary Fund, Cyprus asked Russia for a fresh loan after borrowing 2.5 billion euros last year. A bailout deal with the euro area and IMF will be signed by February 12, said Thomas Wieser, who heads the group of officials that prepare meetings of euro area finance ministers. Cyprus may need as much as 17.5 billion euros, almost the size of its economy, to pay its bills and recapitalize banks, Finance Minister Vassos Shiarly said on November 22. Russia would consider giving financial assistance to Cyprus as a part of international rescue package after the euro area takes a unified stance on aiding the island, President Vladimir Putin said last week in Brussels. “While we don’t exclude taking part, as the president said, we’re not major creditors,” said Storchak, who oversees Russia’s debt and international financial cooperation. If a group of lenders were formed to help Cyprus, it would be based on Cyprus’s membership in the European Union, he said. Russia’s current loan to Cyprus, which matures in 2016, was intended to help communist Cypriot President Demetris Christofias stabilize his government’s finances. Cypriot lawmaker Stavros Evagorou said on October 13 that the government was seeking to extend the loan. Bilateral financial lending to foreign states should be treated as a commercial transaction, where the creditor expects to be repaid, Storchak said. More often, countries seeking financial assistance are in need of grants, though politicians are reluctant to say so openly, he said. [Bloomberg] and isn't Cyprus supposed to be broke by now  ?????? http://www.cyprus-mail.com/austrian/austrian-economist-s-comments-arbitrary-and-groundless/20121225 Austrian economist’s comments ‘arbitrary and groundless’ By Elias HazouPublished on December 25, 2012 Follow the mail on Twitter. + - Text size RELATED CONTENT TOPIC TAGS austrian, bailout, Cyprus,weiser THE GOVERNMENT has again been put on the defensive after a senior EU economist accused Cyprus of stalling the signing of a bailout deal. Thomas Wieser, chairman of the Economic and Financial Committee of the European Union and head of the Eurogroup Working Group, suggested the island was dragging its feet in the false hope that it would be included in a rescue package along with Greece. “Cyprus believed it could be incorporated in a single package with Greece and, despite our warnings, it was delaying,” Wieser said in an interview with Greek paper Kathimerini over the weekend. “Now, it has missed the train,” the Austrian economist said, referring to Cyprus’ bid to have an aid package approved before the end of the year. Nevertheless, Wieser went on to predict that Cyprus would sign a memorandum of understanding with international lenders by February 12 – before the general elections here. But in the same interview he sounded the alarm over the sustainability of the national debt: “The question of sustainability could be solved in part through broad privatisations, but again the Cyprus government did not agree,” he said. The island will not be eligible for a bailout in the event the national debt reaches 120 per cent of GDP, making it unsustainable according to IMF standards because the borrower is not expected to be able to meet interest payments on a loan. Wieser’s warning come hot on the heels of reports last week about foreign quarters expressing concern over the sustainability of Cyprus’ debt. Drawing on Wieser’s remarks, main opposition DISY said they corroborated suspicions that it is the administration’s “inaction, indecision and fear of taking responsibility that have dealt the final blow to the Cypriot economy and a serious shrinking of our people’s standard of living. “Instead of realising the crime they have perpetrated against the citizens and the economy,” the statement added, “instead of apologising that Cyprus has missed the train, they have the nerve to accuse them [the EU], evidently confusing responsibility with blackmail.” A similar reaction came from DIKO: the economy would not now be on the verge of bankruptcy had the government implemented cost-saving measures earlier, the party said. Dismissing the criticism, government spokesman Stefanos Stefanou said Wieser’s comments were “arbitrary and groundless” and that they did not stand up to logical scrutiny. Stefanou wondered how the government could be blamed for delaying when everyone – including the EU – was still awaiting the findings of a due diligence report that will determine the size of the bailout for the banks. “As long as this issue is open, the memorandum cannot be completed,” the spokesman added. “In order for Cyprus to agree to everything it needs to know the amount of the loan and any additional terms,” he said. Last week German newspaper Suddeutsche Zeitung claimed the IMF supported a haircut of the government debt, on the grounds that Cyprus would be unable to pay the interest on the loan, even after the memorandum provisions were implemented. A member of the European Central Bank later confirmed this point: “It is already foreseeable that after the final data, the financing need will be so high that the debt level will be very high and unsustainable,” Joerg Asmussen told Reuters. In such a case, he added, lenders would then have to look at measures to achieve a budget surplus and privatisations. Politis on Sunday ran a story claiming President Demetris Christofias torpedoed last-ditch efforts undertaken by his finance minister to avoid a bailout. The paper said that on April 17, former Central Bank governor Athanasios Orphanides arranged for Finance Minister Vasos Shiarly to meet ECB officials in Frankfurt. At the meeting, Shiarly promised to push through measures slashing Cyprus’ deficit to 2.5 per cent by the end of the year; in exchange, the ECB said it would allow Cypriot government bonds to be used as collateral for the banks, even though the island’s sovereign rating had by then reached ‘junk’ status and Cyprus was shut out of the markets. But according to Politis, Shiarly’s efforts at reforming the cost of living allowance were dashed by the Presidential Palace; a meeting scheduled between Shiarly and trade unions to discuss CoLA was cancelled, apparently at the behest of the President. And at a news conference in early June, Christofias effectively bypassed his finance minister, saying there was ample time to bring the deficit down to 2.5 per cent and that no immediate measures were needed. As a result, Shiarly did not meet the May 31, deadline agreed with the ECB to push through cost-saving measures. This in turn meant the government could not borrow to prop up the banks, which needed to recapitalise by June 30. When that deadline also passed, the government was forced to apply to the troika for a bailout. http://www.cyprusnewsreport.com/?q=node/6404 Standard & Poor's Downgrades Cyprus To CCC+ From B View   What links here Fri, 21/12/2012 - 09:24 — Sarah Fenwick Standard & Poor's said it has downgraded Cyprus' sovereign credit rating to CCC+ from B on concerns that the government's short-term financing position is increasingly vulnerable and it is at risk of a debt default. Presidential elections are scheduled for February 17th, 2013 and a bailout package has not yet been fully agreed with the Troika, said the ratings agency. The agency's outlook is negative. Adding to the doubts about the government's finances, is a 'hesitant' attitude from its EU partners towards sharing the problems in the island's banking sector, said S&P's. The recently passed 2013 Budget, which forecasts state revenues of around 7.6 billion euros and spending of 9.5 billion euros, is too optimistic, said S&P's. The ratings agency estimates a 3.5 percent economic contraction in 2013. The government managed to pay public sector bonuses and wages in December after a 100 million-euro loan from state operated enterprises like the electricity authority. But there is doubt that the same thing can be done in March, when the loan runs out, unless there is a signed bailout Memorandum, according to the ratings agency. There is a one-in-three chance the agency could downgrade Cyprus again in 2013, it said. and....... http://finance.yahoo.com/news/cyprus-uses-pension-money-pay-holiday-salaries-183537467--finance.html NICOSIA, Cyprus (AP) — Cyprus' cash-strapped government had to get loans from state-owned companies to make sure it could pay its own workers' salaries during the holiday period, officials said Monday. Finance Ministry Permanent Secretary Christos Patsalides had urged three big companies to agree to lend €250 million ($329 million) from their pension pots in order to prevent a meltdown of the state's finances. All three indicated that they would be willing to do so. "What would be the outcome if these additional financing needs aren't secured? We'll be talking about the state declaring a suspension of payments in the next few days," Patsalides had told the Parliamentary Finance Committee before the companies agreed to the loan. He said the loan would allow the government to continue paying salaries until the end of February, by which time the country expects to start receiving money from a bailout agreement it is finalizing with the 'troika' of the European Commission, the European Central Bank and International Monetary Fund. Patsalides said the troika had suggested that the government turn to state-owned companies to cover the fiscal shortfall. Were Cyprus' to default on its salary payments, credit rating agencies would cut the country's debt grade to 'selective default', in turn harming the companies themselves, Patsalides said. Some union leaders criticized the government for going after their pension savings and expressed fears that they may never see the money returned. Others asked that the government provide iron-clad guarantees that the money will be re-deposited in their pension funds. Still, the Telecommunications Authority and Ports Authority said they would agree to lend the government €100 million and €38 million respectively in light of dire situation the country finds itself in. Officials from the pension fund of the Electricity Authority, which had the most misgivings, relented late Monday and said they would also lend the government €100 million. Fund manager Georgios Pistentis said that the loan, which would be in the form of a government bond purchase, is subject to "certain confidential conditions" to which the finance ministry has agreed. Cyprus sought international support for its ailing banking sector, which has assets worth four times the country's €17.5 billion ($23 billion) economy. The three main commercial banks lost a combined €4.5 billion in toxic Greek debt and bad loans. A draft of the bailout agreement says that Cypriot banks may need up to €10 billion to bring them back to financial health. The exact figure will be known around the middle of next month once international financial firm PIMCO and auditors Deloitte finish scrutinizing the banks' books. The banks' woes, combined with a burgeoning deficit, pushed the country's credit rating deep into junk territory and made the government unable to borrow from international markets. Cyprus secured a €2.5 billion, low-interest loan from Russia last year, but a follow-up request to Moscow for a second, bigger loan was unsuccessful. The country's parliament passed earlier this month a raft of troika-agreed tax increases as well as salary and benefit cuts to rein in a bloated public sector that soaks up a sizeable chunk of all government spending.