Eurozone finance ministers and the International
Monetary Fund (IMF) said Wednesday that they were ready to help
Cyprus with a full bailout, covering both its banking sector and its
The island nation applied for help on Monday, becoming the fifth eurozone nation after Greece, Ireland, Portugal and Spain to seek outside financial help.
But it was unclear if, like Madrid, it would seek to limit its bailout to the banking sector, avoiding tough EU-IMF austerity conditions on government spending.
In a statement issued after a teleconference, the Eurogroup panel of eurozone finance ministers said they would provide aid "in the framework of a comprehensive adjustment programme" to address the Cypriot economy's "financial, fiscal and structural challenges."
The European Central Bank, as well as the IMF, will be involved in negotiations with the Cypriot government, the Eurogroup said. The three form the so-called troika of institutions that is overseeing the full bailout programmes for Greece, Ireland and Portugal.
"We stand ready to join the efforts of our European partners to help Cyprus return to stable and sustainable economic growth and restore a solid financial sector," IMF Managing Director Christine Lagarde said in a separate statement.
"We expect to send an IMF team to Cyprus to evaluate the situation in the field as soon as possible," she added.
No figures were mentioned for the bailout package. On Tuesday, Cypriot media reported that the country would need 6 billion to 10 billion euros ($7.5 billion to $12.5 billion).
Nicosia said it was forced to seek international help because of its exposure to its Greek neighbour. The government announced the move after the Fitch credit rating agency downgraded Cypriot debt to junk status, lowering its rating one notch to BB+ from BBB-.
The country is also conducting parallel negotiations for bilateral loans from Russia and China, a government spokesman said Tuesday. Moscow has provided help in the past, in the form of a 2.5 billion-euro loan agreed in December.
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