Cyprus president says committed to stability, swift bailout

Thu Feb 28, 2013 2:44pm EST
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By Michele Kambas

NICOSIA (Reuters) - Cyprus's new President Nicos Anastasiades vowed on Thursday to work for a swift conclusion of a bailout for the cash-starved island, ruling out debt or deposit "haircuts" for the Mediterranean nation threatened with a financial meltdown.

Economic turmoil engulfing Cyprus, one of the euro zone's smallest economies, could test the European Union's mettle in a crisis threatening to spill beyond the tiny island's shores and unravel nascent recovery in the bloc.

Cyprus has been waiting for an economic bailout from the EU and the International Monetary Fund for the past eight months, hobbled by its banks' exposure to debt-crippled Greece and fiscal slippage.

The disbursement of aid has been held up by concerns the island could barely afford a bailout bill which might equal its domestic output, and worries in some countries, particularly Germany, that Cyprus lags in financial transparency.

"We are seeking the solidarity of our (EU) partners, and within that framework we will negotiate for the conclusion of a loan agreement the soonest possible," Anastasiades said in his investiture speech to Cyprus's parliament.

Aid to Cyprus is expected to take center stage when eurozone finance ministers meet in Brussels on March 4. A deal is anticipated at the end of March, a senior euro zone official said.

In one of his first appointments, Cyprus will be represented by new finance minister Michael Sarris, an economist with good contacts in Europe, as well as in the U.S., where he was a senior manager for the World Bank for three decades.

Conservative Anastasiades, 66, swept to victory in a presidential runoff on February 24, armed with a strong mandate to conclude desperately needed aid from the EU and the IMF.   Continued...

Cyprus's new President Nicos Anastasiades (R) stands next to his predecessor Demetris Christofias at the presidential palace in the capital Nicosia February 28, 2013. REUTERS/Andreas Manolis