Hopes fade of more money for Cyprus

The European Commission has given Cyprus little hope of receiving significant additional funds from the European Union’s central budget to help it deal with its economic problems. The tough message emerged four days after eurozone finance ministers confirmed that bail-out loans from the eurozone’s rescue fund and the International Monetary Fund (IMF) would not exceed the €10 billion agreed last month. 

José Manuel Barroso, the president of the Commission, on Tuesday (16 April) sent an open letter to Nicos Anastasiades, responding to the Cypriot president’s request for funding last week. Barroso said that it had already been agreed that Cyprus would receive an additional allocation of €150 million from EU cohesion funding under the terms of the EU’s long-term budget negotiations, and that Cyprus would receive extra top-ups because it was now classed as a country in need of help, alongside other bailed-out member states such as Greece and Portugal. But while he did not exclude allocation of additional funds “despite all the well-known difficulties currently associated with these matters at EU level,” he all but ruled out the increased funding under EU cohesion and rural development policies that Anastasiades had requested.

Barroso conceded that future funds from the EU’s long-term budget could be given sooner than would ordinarily be the case. He also proposed carrying out a “needs assessment” to channel EU funding to the areas with the greatest need.

On 11 April, the 17 eurozone finance ministers, meeting in Dublin, agreed that bail-out loans to Cyprus would not increase. “It’s €10bn and that figure hasn’t changed,” Jeroen Dijsselbloem, the Dutch finance minister who chaired the talks, said after the meeting.

It is now estimated that Cyprus has a black hole of €23bn – higher than the €17.5bn that had been estimated at the time that finance ministers agreed to the bail-out. While loans from the eurozone’s rescue fund and the IMF cover €10bn, Cyprus has to find the rest itself, by imposing losses on bank depositors, raising taxes, privatising state industries, and selling off gold.

Mario Draghi, the president of the European Central Bank, who also attended the finance ministers’ meeting, last week wrote to Anastasiades warning him not to sack the head of Cyprus’s central bank, Panicos Demetriades.