Cyprus to speed up negotiations for EU bailout

Cyprus is to speed up the process of concluding a bailout agreement with the European Union (EU) and the International Monetary Fund (IMF) as it will soon run out of money. After President Demetris Christofias concluded a series of meetings with EU and IMF top officials, a government spokesman said on Saturday that negotiations with technocrats of future lenders will be arranged next week, with an agreement expected in October. Christofias talked with IMF Director Christine Lagarde, Eurogroup president Jean-Claude Juncker and Commissioner for Economic Affairs Olli Rehn, who are in Cyprus for the informal ECOFIN and Eurozone Finance Ministers meeting. All three had asked Cyprus to clear up its intentions on the bailout and speed up the process. Cypriot Finance Minister Vassos Shiarly acknowledged that the government will be out of money by the end of October. He said he will be in contact early next week with the European Commission, the European Central Bank and the IMF for the return of their negotiators to Cyprus. "Our side will proceed quickly and decisively on the issue," Shialry said. Cyprus sought EU and IMF assistance to recapitalize its banking system, battered by its exposure to the Greek crisis, and also service its mounting sovereign debt until the end of 2014. The exact amount for the recapitalization of the banks has been variably estimated at between 6 and 10 billion euros, with a further 4.6 billion euros needed to refinance the sovereign debt. Cyprus has the third smallest economy among EU countries, with a 17 billion euro GDP, accounting for just 0.2 percent of the total European economy. After initial negotiations in July, the troika negotiators submitted a lengthy list of demands which caused a public outcry after they were leaked to the press earlier in the week. The troika demanded restructuring of the public finances, which involves salary and pension cuts, abolition of several allowances and improvement of tax collection and tax hikes. In an effort to minimize the effects of a bailout package, Cyprus has entered into still inconclusive negotiations with Russia for a 5 billion euro bilateral loan.