Cyprus has asked for an 11-billion-euro international bailout, of which five to recapitalize its banks and the rest to redeem bonds and pay its bills, sources close to the Cypriot finance ministry said on Thursday.
The country's banks, which lost more than 4 billion euros in Greece's debt restructuring earlier this year, need 5 billion euros of fresh capital, the sources said. But the troika (EU-ECB-IMF) that oversees euro-area rescues puts Cypriot banks' recapitalization needs at about 10 billion euros.
Cyprus on June 25 became the fifth country in the euro area to seek external aid, but no amount was specified at the time. The island has been shut out of international market financing since May 2011, and faces 4.7 billion euros in bond redemptions through 2015. Also on Thursday, government sources said the Cypriot Cabinet last night approved an austerity proposal for the troika that it plans to discuss in a meeting tomorrow with political parties, unions and business groups.
Cyprus may receive the first installment of aid at the end of December, Finance Minister Vassos Shiarly said.
Communist President Demetris Christofias said on Greek television NET that he won't agree to a bailout that requires Cyprus to scrap wage indexation or includes privatization of profitable state-owned companies. ''The neo-liberal method has failed, and a vicious cycle is in place. We won't just say no, we will also provide counter-proposals. They are being finalized as we speak,'' the president said.