Eurozone Finance Ministers were expected on Friday to endorse the details of a bailout for Cyprus, although questions lingered about whether Nicosia would be able to hold up its end of the deal.
While Ministers gathered in Dublin, Cypriot President Nicos Anastasiades said in Nicosia that he would write to European Union officials asking for more money.
He would request “additional help given the critical moments” the island was facing because of “the financial crisis, but also the measures that were forced onto us,” Mr. Anastasiades told journalists.
The letter would be sent on Friday to European Commission President Jose Manuel Barroso, EU President Herman Van Rompuy and European Central Bank (ECB) President Mario Draghi.
It was unclear, however, whether the request was linked to the bailout programme being discussed in Dublin or other funding.
Irish Finance Minister Michael Noonan insisted Cyprus was no longer a “crisis issue,” as the Eurogroup of Eurozone Finance Ministers gathered to consider Nicosia’s 10 billion euro bailout programme.
“The situation in Cyprus is pretty well resolved,” Mr. Noonan said. “I think the big surprise is that it stabilised so quickly after the new arrangements were made.”
“Everything seems to be in place,” said Eurogroup chief Jeroen Dijsselbloem.
“We look forward to the political endorsement of the Cyprus programme and we are ready to start work for a recovery,” said Cypriot Finance Minister Charis Georgiades.
In return for international aid, Cyprus must reduce the size of its bloated banking sector, raise taxes, downsize the public sector and privatise state-owned companies and sell gold reserves.
Depositors with the two largest banks face a levy on holdings of more than 100,000 Euros, under the conditions agreed with the commission, ECB and the International Monetary Fund (IMF).
“I think the right parameters have been defined for the agreement, an agreement that ultimately is a global and fair deal — we need to finalise it today,” said French Finance Minister Pierre Moscovici.
The Ministers are due to endorse the details of a deal they approved in principle on March 25, drawn up by experts from Cyprus’ international creditors in the ensuing weeks.
Cyprus’ financing needs had originally been estimated at 17 billion Euros, but a new assessment by the commission, leaked to media this week, spoke of 23 billion Euros.
The draft document calls for Cyprus’ creditors to provide 10 billion Euros — with 9 billion coming from the Eurozone bailout fund and 1 billion Euros from the IMF — while Nicosia would have to cover the rest.
Ministers brushed aside concerns that the deal could be threatened by Cyprus’ increased needs of 23 billion Euros — which means Nicosia must come up with an extra 6 billion Euros in savings.
“The programme as a whole is substantial and strong enough,” said Mr. Dijsselbloem.
“We have a deal and we shall make it work,” Mr. Georgiades said.
But Austrian Finance Minister Maria Fekter warned, “If the numbers don’t add up, then there probably won’t be agreement from the national Parliaments.” The bailout agreement still needs to pass through national Parliaments including Germany, Finland and the Netherlands.
In Cyprus, meanwhile, capital restrictions were loosened for the second time in a week on Friday, meaning Cypriots can now take 2,000 Euros out of the country.
Bank customers can now transfer up to 300,000 Euros daily within Cyprus and up to 20,000 Euros abroad for business purposes, without special authorisation. Withdrawals remain restricted at 300 Euros daily.
The Ministers in Dublin were also due to hear how bailout recipient Portugal plans to fill a budget gap of about 1.3 billion Euros after the Constitutional Court struck down Government cost-cutting measures last week.
Finnish Prime Minister Jyrki Katainen played down fears of another Portuguese bailout, saying it had “already taken its medicine,” in an interview with Portuguese news agency Lusa.
Former president Mario Soares was threatening to oust the Government over its austerity measures, telling broadcaster Antena 1 that it was impossible for Portugal to repay its foreign debt.
Portugal, along with Ireland, also hoped on Friday for agreement to extend the payback time for its bailout loans. International creditors have reportedly recommended an extra seven years.
The maturities extension must be agreed both by the 17-member Eurogroup and in the wider group of all 27 EU Finance Ministers, because the bailouts involve two different rescue funds.