Cyprus president to ask EU for more help

NICOSIA, Cyprus – Cyprus’ president said Friday he will ask the European Union to provide more help for the crisis-hit country, which has to pay for most of its expected 23 billion euro ($30 billion) bailout.

President Nicos Anastasiades said he will send letters to European Commission President Jose Manuel Barroso and EU Council chief Herman Van Rompuy calling for “a change of EU policy” toward Cyprus by offering additional assistance.

News of the letters sparked speculation among investors that the country was pushing for more money from its international creditors – the European Commission, European Central Bank and the International Monetary Fund – under its bailout package.

However, government spokesman Christos Stylianides said this request for help – which will also be directed to the European Parliament and to the Irish EU presidency – would not seek more bailout cash. Instead, Cyprus would ask to tap more of the EU’s structural and social cohesion funds, which are used to support economic development and invest in infrastructure.

Stylianides said Cyprus would also ask for a bigger EU contribution to jointly funded infrastructure projects.

“The government will move on all levels and hopes to secure significant, additional sources of funding for growth and social cohesion,” he said.

Last month, Cyprus and its international creditors agreed a 17 billion euro bailout package for the country so it could rescue its banking sector and prop up its economy. That figure was based on an estimate that independent auditors had come up with last November. The euro countries and IMF would contribute 10 billion euros, with Cyprus making up the rest – mostly by overhauling its banks.

However, since then, the bailout package has increased to 23 billion euros, with Cyprus’s share burgeoning to 13 billion euros, according to a draft document by its creditors. The 6 billion euro increase is because of a worsened economic outlook and the ailing banks’ higher than expected financing needs.

Stylianides blamed the previous, left-wing administration for dragging its feet and not swiftly finalizing a bailout deal – something that resulted in the economy and the banks being drained of money.

But he said the extra 6 billion euros that Cyprus must fork out could be covered by the measures already agreed to in the bailout deal.

The bailout deal called for imposing losses of between 37.5 percent and 60 percent on deposits over 100,000 euros in the Bank of Cyprus, the largest lender. Depositors in Laiki, the second-largest bank, face losses of up to 80 percent. Cyprus’ increased financing needs suggest the losses may be on the higher end of those ranges.