HOW MANY times have we heard that time was running out, or that it was the end of the line for Cyprus Airways, or that the airline needed cash for yet another restructuring?

Each time, the national carrier was bailed out by the government and parliament of the time and lived to squeeze more money from the taxpayer who also often had no choice but to pay the airline’s exorbitant fares. 

This time however there is no money to inject, and the state has run out of inventive options such as the Turkish ban on Cypriot air traffic, to circumvent EU rules on state aid, even if they had the money to waste.

The European Commission recently initiated an investigation into whether some €100m in state aid granted to CY complied with EU rules. The commission has stressed to Cypriot authorities that “no further state aid measures in favour of Cyprus Airways should be implemented without the Commission's prior approval.

The Commission said also it doubted the airline's capital increase, with a €31.3m contribution from the Cypriot state, was conducted on market terms. It is also looking into a €73m rescue loan for the ailing airline because it appears the airline has only implemented parts of a restructuring plan.?

Most shocking but not surprising, the Commission has doubted the credibility of the plan due to the airline’s suspect intention to grant compensation to redundant personnel over and above what they were entitled to.

Cyprus Airways has always been a honey pot for politicians and its own employees so it’s no surprise they would continue to squeeze out of it whatever they could. 

For decades every Tom, Dick and Harry and their extended families enjoyed free travel, pilots enjoyed some of the highest salaries in the world and the airline employed three times as many people as it needed to operate. 

Every time it lost money it blamed it on competition without making any actual effort to compete itself. The word ‘restructuring’ became synonymous with: ‘voluntary redundancies with as much as you can walk away with’. 

Well, it seems as if this time the party might really be over and the ‘gravy plane’ grounded. The state does not have the money to bail it out one more time and even if it had, there are no more ways try and fool Brussels. They are well and truly on to us. 

The pity is that it is a time like this Cyprus needs a national carrier to help the tourist industry survive. A real restructuring would have streamlined it years ago and it might have been better able to compete and survive on its own instead of being milked for all it was worth. It should have been an asset to the economy, not the liability it has become.

THE Central Bank of Cyprus (CBC) yesterday handed lawmakers a list of 6,000 companies and individuals who withdrew money from Cyprus up to 15 days before a controversial Eurogroup decision to force losses on depositors as a condition for a €10 billion bailout. 

However, the chairman of the House Ethics Committee, who was due to look into a list detailing transfers of more than €100,000 from the two major banks - Bank of Cyprus (BoC) and Laiki - said the list fell short of what he had requested.

"It was with great disappointment and anger that, when we opened the envelope, we realised it contained data for only 15 days even though we had asked for a year," MP Demetris Syllouris told reporters. "This kind of behaviour is unacceptable."

The amounts transferred were in the region of tens of millions, Syllouris said.

In a letter to Syllouris, then Central Bank (former) deputy governor Spyros Stavrinakis said he was only attaching a list of individuals and companies who transferred money out of Cyprus between March 1 and 15 this year.

"We believe your request would lead to a huge volume of information, which would possibly not help the aim of your committee," Stavrinakis said. 

This included foreign companies that transfer large sums of money each day, as well as Cypriots who bought property, he said.

Syllouris said the CBC governor’s behaviour was unacceptable and that he would summon Panicos Demetriades to appear before the committee and explain why he refused to hand over all the data.

Syllouris said the list would not be given to MPs or parties because it was incomplete. And it would not be made public before the reasons for the withdrawals were determined.

Cypriot banks were shut down for nearly two weeks to prevent a run on deposits by panicked savers, after a March 15 bailout deal Cyprus struck with the European Union to save it from bankruptcy forced small and big depositors in all banks to bear part of the cost.

Parliament rejected the deal and a new one was struck a week later, which saw the resolution of Laiki and forced losses on uninsured deposits – over €100,000 -- in BoC, which could reach 60 per cent.

Banks reopened on March 28 under tight restrictions and a cash withdrawal limit of €300 per day, but disclosures that capital was shifted out of the island in the run-up to the lockdown on March 15 fuelled public anger and prompted parliament to 

investigate.

It did appear however that the government had been expecting, or maybe preparing for some sort of haircut on deposits before the Friday March 15 Eurogroup meeting.

In an interview on private TV station Sigma, Attorney-general Petros Clerides said he had been asked on Friday morning to prepare legislation regarding a haircut on deposits.

“Two senior finance ministry officials came to my office with instructions to prepare legislation,” Clerides said. The island’s top lawyer said they left some gaps in the bill to be filled later, without clarifying.

“It did look like the situation was very bad but everyone expected or hoped that it would be avoided at the last moment,” Clerides suggested.

Former ruling party AKEL jumped on the opportunity and accused the government of knowing in advance despite their declarations to the contrary and despite pledges they would never accept a haircut. Essentially they accepted it however before the Eurogroup even met, AKEL MP Stavros Evagorou said.

He also censured President Nicos Anastasiades for not consulting with other parties before departing for Brussels that weekend. 

Government spokesman Christos Stylianides said Anastasiades found out about the lenders intentions during meetings with the heads of the IMF and the ECB when he got there.

“Anyone attempting to muddy the waters by saying unreal things was effectively trying to hide their own responsibilities,” Stylianides said, suggesting that the previous administration knew full well what was going on.

The haircut on deposits as a means to recapitalise the island’s stricken banks had been mooted repeatedly during the previous administration’s tenure, and especially towards the end of the year and through January.

Chairman of the House Ethics Committee, Demetris Syllouris, received the list yesterday (Christos Theodorides)

LAIKI (Popular) bank depositors have formed themselves into an organised group, already have hundreds of members and are growing, they said yesterday.

Adonis Papaconstantinou, a spokesman for the group named as The Popular Bank Depositors’ Association appealed for the word to be spread that the depositors were organising.

“It is irrelevant whether they have already taken individual legal action. Together we have more chances of winning,” said Papaconstantinou.

“We have already started a collaboration with established law firms. There will be a large number of law firms coordinating in Cyprus which will be manned by experts in both Cyprus and abroad. A well known and reputable European law firm will also be involved because we do not plan to have talks amongst ourselves in Cyprus only,” he added.

The legal teams are looking into the possible violations of the constitution, the possible violation of human rights and other foundations on which the European Union, the eurozone and the Republic of Cyprus are founded on, possible acts of fraud, possible illegal transactions, and the possible attempt to compensate insured depositors (below €100,000) by the uninsured instead of the government.

“We shall act legally, peacefully and in a civilised manner. However, we unconditionally stress the fact that under no circumstances should a civilised and peaceful approach be interpreted as weakness,” said Papaconstantinou.

“When it comes down to it, who or which body has the right or the infallibility to decide that we should perish for the public good? Which is in fact the only thing that we have been hearing all this time as an excuse for the implementation of the illegal, unethical, unjust, paradoxical, unmentionable, unconstitutional and certainly wrong actions taken by the various Executive Boards of the Popular Bank, the auditors of the bank, the Central Bank and the Cyprus Government. We shall not refer to the troika because we believe that the Cypriot statutes solely bear the responsibility of protecting us. None of the governing bodies, rulers, none of the statutory institutions, nobody from anywhere thought to do something for us or to even suggest a counterbalancing alternative for the “robbery” to which we were subjected.” For info: synkatlai@gmail.com

AROUND 300 Cyprus Airways employees protested outside the Presidential Palace yesterday at the same time that the cabinet was meeting to discuss the national carrier’s future.

The employees asked for the government’s support to prevent the airline from closing and for them to take an immediate political decision.

Employee representatives entered the Presidential Palace and met with head of the President’s office, Panayiotis Antoniou, and also spoke with Communications and Works Minister Tasos Mitsopoulos before he entered the cabinet meeting. 

“I have been working for Cyprus Airways for 21 years and it not only helped me feed my family but it is a large part of who I am,” one protester said. “We are not only losing our jobs but a large part of Cypriot history,” she added.

The employees demanded that their provident funds and their jobs be saved as they have families to feed. 

“We are in a desperate position right now because decisions should have been taken a long time ago,” another protester said. “This indecision is leading to people travelling to and from Cyprus from the occupied areas,” she added. “This whole situation is unacceptable and our hotels will close because they are far more expensive than hotels in the north,” she concluded.

For others, the current turmoil the company is in was depressing after being employed for many years by the airline. “They need to take a political decision as this company has a long and rich history,” an employee with 33 years worth of experience said. 

“We have been accused of receiving large salaries but what most people are unaware of is we have had cuts of 40 per cent which makes it very difficult to survive,” he added.

The workers gathered at around 9am at Cyprus Airways’ offices before heading to the Presidential Palace. They carried banners saying ‘No to Unemployment’, ‘Secure our Jobs’, and ‘No to the destruction of Cyprus Airways’.

Cyprus Airways employees yesterday protested against any closure of the company (Christos Theodorides)

THE government yesterday decided to keep national carrier Cyprus Airways (CY) flying, at least throughout the summer, but measures to restructure the company must be fully accepted by staff.

“This is a crucial condition,” government spokesman Christos Stylianides said after a cabinet meeting yesterday. “Keeping the company alive with the aim of selling it to a strategic investor is based on the responsible stance of all those involved.”

The measures include cutting staff by 560 immediately, a 17 per cent cut in salaries and reducing the fleet to six aircraft from 10.

Unions said the provident fund of those being laid off was not secured and there was no gratuitous compensation.

SIDIKEK PEO representative Antonis Neophytou described the cabinet’s decision as blackmail.

He said the matter would be discussed by the union, which will seek to hold a dialogue with the government.

“If the government responds, we must agree by Saturday,” Neophytou said.

Andreas Pierides, the chief of SYNIKA SEK, said it was a very serious matter that the union will decide how to handle today.

Stylianides said the measures could help in finding an investor.

It was announced last week that a Chinese company was interested in buying the airline but nothing concrete has emerged so far.

Middle East Airlines had also shown an interest in CY in the past.

The spokesman warned that time was running out.

“It is a private company and the responsibility for the consultations lies with the board. Consultations continue, the board has told the government, but time is very very limited,” Stylianides said.

The pilots union PASYPI, welcomed the cabinet decision to restructure the company based on a plan drafted by Air France Consulting.

The unions said it was ready to respond to the government’s call for dialogue and urged all involved to rise to the occasion and cooperate for the airline’s salivation.

The company posted a €55.8 million loss in 2012 compared with €23.9 million in 2011.

“The government inherited a very difficult and unsound situation, which was also left to deteriorate,” Stylianides said. 

Itself cash-strapped, the government cannot afford to pour more money into CY. 

Even if money was no object, however, legal constraints prevent any cash injection whatsoever.

The European Commission recently initiated an investigation into whether some €100 million in state aid granted to CY complied with EU rules.

The commission has stressed to Cypriot authorities that “no further state aid measures in favour of Cyprus Airways should be implemented without the commission's prior approval.”

The commission said also it doubted the airline's capital increase, with a €31.3m contribution from the Cypriot state, was conducted on market terms. It is looking into a €73 million rescue loan for the ailing airline, as well.

THE CABINET yesterday decided to freeze controlled rents for the next two years in light of the deteriorating economic situation in Cyprus. 

Justice Minister Ionas Nicolaou said the decision to block rent increases from April 22, 2013 until April 21, 2015 for “controlled areas”, was taken as a result of the impact of the economic crisis, particularly on small and medium-sized businesses who rent property, shops or offices. 

Under Cypriot rent laws, landlords can increase rents by a maximum of 14 per cent every two years. 

The minister also called on property owners to cooperate with tenants and businesses to help them get through the worsening crisis, asking them to go beyond a freeze on rent increases and “reach a common understanding in solidarity (with tenants) for a reduction in the rent”.  

“In these difficult times we are going through we must stand by each other to overcome today’s problem which demands urgent attention,” said Nicolaou. 

The minister clarified that “controlled areas” meant those areas that come under the Rent Act, representing over 75 per cent of immoveable property rented in the country.  

The cabinet decision also applies to those areas deemed “disadvantaged”, where rent is already very low. 

Asked how much the state would save as a result of the decision to freeze rents, Nicolaou said in many cases following consultations with property owners, rents have seen a significant decrease already. 

“We call on the owners and tenants to demonstrate the same level of responsibility and reach agreement on reducing the rent so everyone can respond (to the crisis) and the rent does not kill off businesses or other activities,” he said. 

According to Nicolaou, the rent freeze issue was raised during a meeting on Tuesday with the Cyprus Immoveable Property Owners’ Association KSIA, and small shopkeepers’ association POVEK.  

KSIA yesterday released a statement rejecting the idea of a legal obligation to reduce rents, calling instead for tenants and landlords to come to a mutual agreement on a decrease in the rent. 

“Market conditions for months now have already imposed significant rent reductions while many properties are left vacant,” said KSIA. 

According to the announcement, property owners supported Nicolaou’s proposal to freeze rents for two years and not impose legal obligations to reduce rent, leaving it instead to market forces to determine. 

Highlighting the “tragic moments” the economy is experiencing, KSIA called on its members to show solidarity to tenants and if need be, proceed with rent reductions so as not to force out tenants who have until now shown consistency in their obligations.  

The association also noted that the supply of rentable properties currently outweighed demand, giving tenants the upper hand in negotiations. KSIA called on tenants to be reasonable in their demands.

Controlled areas means those places that come under the Rent Act, which is around 75 per cent of properties

UNTIL capital controls become more relaxed and the banking situation returns to normal, the Central Bank has decided not to blacklist anyone whose cheques may have bounced recently.

“During these difficult times, the Central Bank has informed the Central Information Archive to suspend operation,” Central Bank spokesperson, Aliki Stylianou said. She added this meant that anyone whose cheque may have bounced recently would not be blacklisted. 

Stylianou said the measure would remain in place until things returned to normal and was aimed at helping those who might have unwittingly had their cheques bounce. The problem with the cheques materialised with bank closures last month.

A person or a company’s name will be placed on the Central Information Archive’s blacklist if in the space of three months, three of their cheques bounce, irrespective of the amount, or if a cheque of over €2,000 bounces.

The current relaxation of measures has been labelled as dangerous by various economists who warn that there could be people taking advantage of the situation. Head of the Cyprus International Institute of Management (CIIM), Theodoros Panayiotou said it could be seen as a double-edged sword. 

He said it would protect people who issued cheques before any haircut was decided but would also protect anyone who might issue a cheque in the knowledge that they do not have the funds to cover the value of it. He added that this could cause more problems as it would be difficult to ascertain who issued a bounced cheque unwittingly and who issued one knowingly.

For one businessman the banks lack of flexibility has caused his company severe operational difficulties. “I had deposited roughly 10 cheques valued at €15,000 although they hadn’t cleared yet and I wanted to make a payment of €140 but couldn’t because my account had reached its limit,” he said. He told the Mail he had to leave an important meeting to transfer money from a personal account to cover the €140 payment. “I’m not asking the banks to break the rules, and we are probably in this mess right now because our banks have been overly flexible over the years, but all I want is for them to use common sense when it comes to certain transactions,” he added. He believed it was not a legal issue but rather a moral one but fully understood that although they weren’t exercising common sense, banks were doing everything by the book.

THE HOUSE Ethics Committee will look into whether parliament was misled by the Central Bank of Cyprus (CBC) governor over the terms of reference of an investigation he launched into the island’s banking debacle.

House President Yiannakis Omirou said yesterday if the committee finds there is a case, it will draft a report and send it to the plenum for discussion behind closed doors.

If the plenum judges there is an issue of misconduct through disciplinary or criminal offences, the case will either be referred to the attorney-general, or a parliamentary investigating committee will be set up, Omirou said.

The decision was taken yesterday following a meeting of parliamentary party leaders and representatives at the House to discuss allegations that CBC governor Panicos Demetriades misled parliament over an investigation ordered by the regulator into Bank of Cyprus and Laiki (Popular) Bank.

“The ethics committee will look at whether he supplied sufficient information or the correct information to parliament,” Demetris Syllouris, chairman of parliament's ethics committee, said.

A spokesperson for the CBC said Demetriades had not been summoned to give his position in parliament.

Demetriades has come under attack from many quarters in recent weeks, following the Eurogroup’s decision to wind down Laiki and recapitalise the Bank of Cyprus, in the process taking a massive swipe at uninsured depositors of both banks. 

Laiki was part-nationalised last year when attempts to find a buyer for it collapsed. 

The governor, who took up his five-year post in May 2012, has come under fire for allowing Laiki to receive more than €9 billion in emergency liquidity assistance to keep it afloat. With the winding down of Laiki, this debt has since been passed on to the Bank of Cyprus.   

With the net seemingly closing in around him, the new DISY government on Tuesday rescinded the appointment of Demetriades’ close aide, deputy governor Spyros Stavrinakis. The latter was appointed by the previous AKEL government during its last days in office.  

Demetriades had assigned the investigation into the banking collapse to global forensics and dispute service providers Alvarez and Marsal (A&M) which had been tasked with looking into all the aspects that led the island’s two biggest banks to seek assistance from the cash-strapped state, resulting in Cyprus requesting a bailout from international lenders.

According to reports, lawmakers are peeved that Demetriades informed Omirou in a letter last November that the investigation would cover the activities of both banks yet the final report appears to only focus on the one, Bank of Cyprus. 

The findings of the investigation were leaked to the media last Thursday with some of the aspects, including the acquisition by Laiki of Greek Government Bonds (GGBs), nowhere to be found.

Both members of parliament and the government questioned the apparent failure to probe certain vital aspects of the affair, particularly those relating to the actions and omissions of Laiki. 

Government spokesman Christos Stylianides said the final A&M report raised questions regarding the objectives and terms of reference set from the beginning. 

The CBC was quick to stress that the investigation was not over yet. The regulator, which has been heavily criticised over its handling of the banking crisis, cited a part of the A&M report, which said the investigation would continue, focusing next on Laiki.

However, according to leaked excerpts of the preamble to the A&M report, the mandate “originally anticipated a robust investigation” of the need for Laiki to have required state aid and the events which led to the state acquiring 84 per cent of the bank’s shares. 

This was meant to have addressed the shifting of Laiki’s Greek liabilities to the Cypriot balance sheet. Laiki was merged with two Greek banks, Marfin and Egnatia, in 2007. 

But according to the leaked preamble, A&M were advised early in the investigative process that such a robust mandate could jeopardise any potential recovery from litigation launched at the time by the state-owned Laiki against Greece, as well as an internal central bank probe. 

This began an internal dialogue that resulted in a “narrowing” of the Laiki investigation, said the A&M report. 

As a result, the investigation in respect of Laiki (former Marfin Popular Bank) was limited to the Laiki conversion of its loss-making Greece-based subsidiary Marfin Egnatia into a branch and only from the perspective of the CBC’s supervision of this conversion.

The former AKEL government has long argued Demetriades’ predecessor Athanasios Orphanides had wrongly approved the conversion. 

AKEL spokesman Giorgos Loucaides said yesterday parliament’s investigation into Demetriades was a clear attempt to shift responsibilities away from bankers and the former regulator and on to Demetriades. “These are trumped-up charges,” he said.

The House Ethics Committee will convene next Tuesday to begin discussions on the investigation into the beleaguered governor. 

Central Bank Governor Panicos Demetriades: under fire

THE Presidential Palace insisted yesterday that President Nicos Anastasiades had not been aware of instructions to draft legislation regarding a ‘haircut’ on deposits before the decision was actually announced by the Eurogroup.

In a statement yesterday, the Palace also suggested that the previous administration knew about a possible haircut, at least since November last year, pointing to a reference in the preliminary bailout deal agreed by former president Demetris Christofias.

The matter came to the fore on Monday evening, after Attorney-general Petros Clerides revealed he received instructions from the finance ministry on the morning of March 15 to prepare a bill concerning a haircut on deposits.

“Two senior finance ministry officials came to my office with instructions to prepare legislation,” Clerides said. The island’s top lawyer said they left some gaps in the bill to be filled later, without clarifying.

Late on Friday evening, the Eurogroup announced a decision to slap all depositors with a levy of 6.7 per cent for deposits under €100,000 and 9.9 per cent above that amount.

Former ruling party AKEL jumped on the opportunity and accused the government of knowing in advance despite their declarations to the contrary and despite pledges they would never accept a haircut. 

The Presidency denied that Anastasiades knew, and published a March 20 letter to the finance ministry in which Anastasiades demanded to know which ministry official had instructed Clerides and who had ordered the official to do so.

The ministry responded that it was a senior official who, along with two others, had been handling the bailout issues.

The Presidency said it was apparent that the state bureaucracy was acting within the framework of the November 23, 2012 agreement “that was based on the logic of a haircut as set in paragraph 1.19 of the initial memorandum.”

The paragraph in question states: “The authorities will introduce legislation establishing a comprehensive framework for the recovery and resolution of credit institutions, drawing inter alia on the relevant proposal of the European Commission1. The framework will be subject to consultation with the EC, the ECB and the IMF and will enter into force by [end-January 2013].”

The proposal cited in the paragraph clearly refers to “bail-in” – what the EU did in Cyprus -- as a method of recapitalising stricken lenders.

EU officials have denied that Cyprus would be used as a template, but Reuters reported yesterday that EU ministers will consider a proposal this week to impose losses on interbank deposits of lenders in dire financial trouble as they shape a draft EU law introducing powers that would also penalise those with big savings.

In a document prepared by government officials in Ireland, which as holder of the rotating EU presidency, will chair the ministers' gathering, they write that interbank deposits of less than one month should also be penalised.

The proposal will be part of wider talks to consider when, for example, depositors should be penalised if a bank runs into difficulty. This is known as bail-in.

Shareholders are the first to lose their money, with various rankings of creditors behind them.

Customer bank deposits of up to €100,000 would remain protected under an existing EU law and the latest proposals touch on sums above this threshold.

"While it is acknowledged that bailing in interbank liabilities may carry certain risks," officials write in the document, seen by Reuters, "on balance, it is preferable ... that these liabilities are not excluded from bail-in".

Such a suggestion will dismay many officials, who witnessed a freeze in interbank lending that the European Central Bank is still struggling to unblock despite having provided more than one trillion euros of cheap funds.

At a meeting of EU country officials in Brussels yesterday, France and Italy expressed serious reservations about the idea.

Although some policymakers have sought to portray Cyprus and the losses suffered by depositors at two of its banks as a one-off, many experts believe it marks a dramatic change in tack in how Europe deals with troubled banks, to spare taxpayers who have been on the hook for previous bailouts.

Jeroen Dijsselbloem, head of the Eurogroup of eurozone finance ministers, has said that in future, the currency bloc should first ask banks to recapitalise themselves, then look to shareholders and bondholders and then "if necessary" to uninsured deposit holders. He later backtracked on his statements.

Cypriots have suffered heavy losses from the haircut, and despite denials, the EU is looking at this as a template

ON SUNDAY a Greek newspaper carried a report that Attorney-general Petros Clerides had suspended prosecution for driving offences against his son. 

Clerides, declined to comment until Monday night on a television current affairs show where although he was not specific about the reported offences – drink driving and not having an MOT – he did confirm that an offence had taken place and that he had suspended prosecution.

Article 113 of the constitution grants the Attorney-general or members of his office acting on his instructions the right to suspend any prosecution against anyone in Cyprus “exercisable at (the AG’s) discretion in the public interest”.

While no one is saying the AG acted illegally, his reasoning is however flawed. 

He suggests the fact that he did not sweep the whole affair under the carpet showed transparency. He suggests the fact that he has suspended such prosecutions for other people’s children means his own son should be treated no differently. He suggests it was no big deal because the particular offence is now regulated by an on-the-spot fine and is not really an offence at all.

This is a complete inversion of all logic and a brazen example of Orwellian doublespeak.  

Whether he did it above board or under the carpet, he has sent the message that some people are above the law. His, son, a lawyer was 32 years old at the time, not errant teenager who didn’t know any better and might deserve a second chance. And how was quashing such a prosecution in the public interest anyway?

If a driving offence punishable by an on-the-spot fine is not really an offence at all, why is it written in the law and why is there a fine?

If there were, as the AG said, no serious consequences on his son’s career from the driving offence, why not just pay the fine? It’s not like he could not afford it. Even if there were extenuating circumstances that we are not aware of that caused his son to commit a driving offence, the fine could have and should have been paid since it was all ‘no big deal’ anyway. 

The AG says he is not ashamed of his actions and merely wanted to treat his son the same way he has treated other people’s children. Does that mean he suspends more driving prosecutions than not? If the majority are fined, then his son, by his own reasoning, should actually have been fined if he wanted to treat him like most others.

The whole point of punishing those who break the law is that they won’t offend again or worse still, harm someone by their repeated actions. 

If the highest lawyer in the land can dismiss the letter of the law with a wave of his pen, there is not much hope for this country. It’s the AG’s job to lead by example but the only example that has been shown here is that the law is not worth the paper it’s written on, if you know the right people that is.

CYPRUS has agreed to sell excess gold reserves to raise around €400 million to help finance part of its bailout, according to an assessment of the island’s financing needs prepared by the European Commission, revealed yesterday. 

The draft assessment, referring to the gold sale, obtained by Reuters, also said that Cyprus would raise €10.6 billion from the winding down of Laiki Bank and the losses imposed on junior bondholders and the deposit-for-equity swap for uninsured deposits in the Bank of Cyprus.

Nicosia would get a further €600 million over three years from raising the corporate income tax rate and the capital gains tax rate.

Out of the total Cypriot financing needs of €23 billion between the second quarter of 2013 and the first quarter of 2016, the eurozone bailout fund will provide €9 billion, the International Monetary Fund €1 billion and Cyprus itself will generate €13 billion, the assessment said.

The Central Bank of Cyprus (CBC) said last night however that selling the island’s gold had not been on the table.

“Such an issue has not been raised, has not been discussed and is not being discussed at the moment,” CBC spokeswoman Aliki Stylianou said.

Stylianou added that sale of the gold was a matter handled exclusively by the CBC board.

The sale plan, set out in a draft assessment of Cypriot financing needs prepared by the European Commission, would be the first major gold disposal by a euro area central bank since France sold 17.4 tonnes of gold in the first half of 2009.

"The amount mentioned, 10 tonnes, is not large - we've seen that on average come out of exchange-traded funds this year every week," Macquarie metals analyst Matthew Turner said.

"But it's the first eurozone country to have said it will do this, and the first eurozone country to sell gold, other than Germany's coin programme, for a while."

At current prices, €400 million worth of gold amounts to 10.36 tonnes of metal. Cyprus' total bullion reserves stood at 13.9 tonnes at the end of February, according to data from the World Gold Council.

"A bearish interpretation would be, where Cyprus leads, others will follow," Turner said. "If those others were Spain or especially Italy, they have very large reserves. But there are good reasons to think in this, as in other aspects, Cyprus is a special case."

"No country's gold reserves are sufficient on their own to make more than a small (difference) in their debt position, and they probably think holding gold reserves is better than selling them... if there is a risk you may leave the euro."  

Reuters also reported that the maximum average maturity of the eurozone bailout loans to Cyprus would be 15 years and the longest maturity would be 20 years.

Cyprus will be charged a 10 basis point margin above financing costs for the loans, plus a 50 basis point up-front fee for every disbursement, said the proposal, which will be discussed tomorrow by EU finance ministers in Dublin.

The ESM document, obtained by Reuters, bears the date of April 23, 2013, indicating that this will be the date when the eurozone is likely to formally sign the bailout agreement with Cyprus.

Cyprus' economy is expected to contract 8.7 per cent this year following the EU-IMF bailout. The analysis from the EU and IMF shows that the economy will go on contracting through 2014, returning to marginal growth of 1.1 per cent in 2015. At the same time, debt as a proportion of GDP will peak at 126 per cent, before falling to 104 per cent in 2020, the debt sustainability report shows.

The analysis, which underpins the €10 billion bailout forecasts the budget deficit to be 6.0 per cent of GDP this year, 7.9 per cent next year, 5.7 per cent in 2015 and 2.5 per cent in 2016.

Meanwhile, Standard & Poor's Ratings Services yesterday raised its outlook on Cyprus to stable from negative, saying it expects the troubled government to agree to the terms of a bailout, averting any immediate risk of a sovereign default.

The Central Bank has denied the reports on Reuters that gold reserves would be sold off for bailout

The biggest union for national carrier Cyprus Airways (CY) has rejected a government proposal to restructure the company which needs full acceptance by staff to go through.

SYNIKA-SEK said in an announcement that the proposal was not acceptable as it stood, “needing substantial improvements”.

“We fully understand the dire financial condition of the state but also the bitterness and anguish of Cyprus Airways employees, who are realising their job positions and provident (pension) funds are in danger,” SYNIKA said in an announcement.

“At this crucial time we are call all employees to stand together,” the announcement said.

Proposed measures – based on a plan drafted by Air France Consulting – include cutting staff by 650 immediately from the roughly 1,000 employed by CY, reducing salaries by 17 per cent and reducing the fleet to six aircraft from ten.

CY employees protested outside the Presidential Palace yesterday (Wednesday) as Cabinet was meeting to discuss the airline.  They were asking government to support CY, their job positions and their provident funds. Communications Minister Tasos Mitsopoulos has said that government made the “least painful choice under the circumstances that would keep the company going despite the dramatic financial circumstances”.

CY posted a €55.8 million loss in 2012, compared with a loss of €23.9 million in 2011, while the government urgently needs assistance from its international lenders to meet its financing needs.

The European Commission has recently launched an investigation into whether some €100 million in state assistance granted to CY complied with EU rules.

The Commission has said that that the government can give no more help without their prior approval.

THE biggest Cyprus Airways (CY) union CYNIKA-SEK has rejected a government proposal to restructure the company, which needs acceptance by all staff to go through. 

CYNIKA said in an announcement yesterday that the proposal was not acceptable as it stood,  and needed “substantial improvements”. 

“We fully understand the dire financial condition of the state but also the bitterness and anguish of employees at Cyprus Airways, who are realising that their job positions and provident (pension) funds are in danger,” CYNIKA said. 

“At this crucial time we call on all employees to stand together,” it added.

Proposed measures – based on a plan drafted by Air France Consulting – include cutting staff by 650 immediately from the roughly 1,000 employed by CY, reducing salaries by 17 per cent and reducing the fleet to six aircraft from ten. 

CY chairman Stavros Stavrou said the choice was between taking a decision or else letting the company close down. 

A few hours before CYNIKA rejected the current restructuring plan, union chief Andreas Pierides told state broadcaster that the proposal was nothing more than an ultimatum. 

Pierides said they had issues with the lack of redundancy compensation, cutting salaries across the board rather than having staggered wage cuts, and were worried about their pension funds and their Bank of Cyprus deposits.

Stavrou said provident funds would “be secured”. 

On Wednesday the cabinet decided to give CY another last chance and keep it open at least until the end of the summer season.

Communications Minister Tasos Mitsopoulos said yesterday the government made the “least painful choice under the circumstances that would keep the company going despite the dramatic financial circumstances”. 

“The board was asked to submit a number of scenarios. Based on those scenarios, a choice was made which was the least painful under the circumstances,” Mitsopoulos said. .

Mitsopoulos conceded that timeframes were “asphyxiating”. But he said the reason for that was that the government itself was facing pressing deadlines. 

“There is no leeway for moves and flexibility as there might have been six months ago or a year ago,” Mitsopoulos said. 

Majority state owned CY posted a €55.8 million loss in 2012, compared with a loss of €23.9 million in 2011, while the government urgently needs assistance from its international lenders to meet its own financing needs. 

The European Commission has recently launched an investigation into whether some €100 million in state assistance granted to CY complied with EU rules. 

The Commission has said that the government can give no more help without their prior approval. 

The pilots’ union, PASYPI, is due to meet today to discuss the government’s proposal.

THE COUNCIL of Europe’s Moneyval has completed its independent audit of Cyprus’ anti-money laundering laws and their implementation, while a second private audit is now on its way, said Cyprus’ anti-money laundering head Eva Rossidou Papakyriacou yesterday. 

The investigation into alleged money laundering activities was made a precondition to a €10 billion Cyprus bailout by its EU partners and the troika. Another precondition, which only became apparent to the general public last month, was a “bail-in” of Cypriot bank depositors, who would be forced to contribute to the rescue package. 

Government spokesman Christos Stylianides yesterday confirmed reports that the total package (including the bail-in and bailout) has now increased from the original €17.5 billion estimate to €23 billion. He put the blame for the dramatic increase squarely on the shoulders of the previous government. 

Speaking to state broadcaster CyBC yesterday, MOKAS (Unit for Combating Money Laundering) head Papakyriacou explained that the agreement for an independent audit- one of the conditions set by the EU for the island’s bailout- provided for two parallel audits.

The first would be headed by the Council of Europe’s Moneyval Committee, and the second by an independent private firm, with both coming under the supervision of the Central Bank of Cyprus (CBC). 

“Moneyval’s evaluation is complete. A group of officials came to Cyprus, completed their work and have left. Our information is that their report is ready and will be submitted to the CBC,” said Papakyriacou. 

She added that “the private auditing firm will start its work in a few days”.

According to CyBC, the private audit firm hired to carry out the job is believed to be Deloitte. 

The MOKAS chief explained that Moneyval and the private firm were carrying out “parallel investigations” which “involve the same issues but using different methodologies”. 

Asked if two separate reports will be submitted to the Eurogroup which demanded the anti-money laundering audit in the first place, she replied: “There might be a provision in the mandate for exchange of information between the two teams of auditors, but certainly Moneyval has a different method which is internationally established and implemented by international institutions. I understand that the private company will do something different.” 

Prior to the Eurogroup’s decision to agree in principle to a €10 billion bailout of Cyprus, EU finance ministers demanded an independent audit of Cyprus’ anti-money laundering rules and application. 

Cyprus came under heavy criticism from eurozone members, particularly Germany, for an apparent lax approach to money laundering activities on the island.

The EU powerhouse blamed Cyprus’ alleged light touch on anti-money laundering for creating an inflated banking system that needed rescue following massive exposure to the EU haircut on Greek bonds.   

German media, citing unconfirmed German intelligence reports, published frequent articles about Cyprus’ banks being filled with dodgy Russian money, the implication being that German taxpayers were being asked to save the Russian mafia’s money. 

Without ever specifying details, EU finance ministers echoed German media sentiments on the culpability of Cypriot depositors, with German Finance Minister Wolfgang Schaueble stating that those who created the crisis will pay for it through a “bail-in” of the banks. 

French Finance Minister Pierre Moscovici went so far as to call Cyprus a “casino economy”. 

Before the independent audit could even start, however, Cyprus’ international lenders agreed to lend Cyprus €10 billion. 

Now, with the audit only half way through its mission, it has transpired that Cyprus will need to come up with several extra billion on top of what was originally demanded by the troika.

PRESIDENT of the European Central Bank (ECB) Mario Draghi has sent a letter to the Cypriot leadership regarding recent efforts to remove Cyprus’ Central Bank Governor Panicos Demetriades from office. 

The letter was sent to President Nicos Anastasiades and House President Yiannakis Omirou on Wednesday regarding recent reports of discussions in the Cypriot parliament suggesting a procedure for the dismissal of Demetriades might be initiated. 

The ECB head reminds in his letter of the independence of EU central banks, noting that governors can only be dismissed on grounds specified by EU law. 

The letter, reported by Stockwatch and obtained by the Cyprus Mail adds: “EU law establishes only two clear grounds for dismissal, namely if the Governor no longer fulfils the conditions required for the performance of his duties or if he has been guilty of serious misconduct.”  

Draghi notes that initiating a procedure for dismissal is a “very serious step”, which can only be undertaken if there are serious allegations that one of the grounds for dismissal provided by EU law has materialised. 

In other words, criminal prosecution should only proceed if there is evidence of criminal acts. 

“In the absence of such serious allegations, any attempt to elicit evidence against a Governor as a means of putting pressure on him would jeopardise the Governor's statutorily protected independence,” said Draghi.

The ECB chief added that a decision to remove a governor from office is subject to the judicial control of the Court of Justice of the European Union.

On Wednesday, Omirou announced that the House Ethics Committee will look into whether parliament was misled by Demetriades over the terms of reference of an investigation he launched into the island’s banking debacle. 

If the committee finds evidence of misconduct, the plenum will then choose to refer the matter to the Attorney-general or set up a parliamentary investigative committee. 

Demetriades has come under fire from various quarters recently over his handling of the banking crisis. Some accuse the governor of misleading parliament regarding the mandate of the independent investigation by Alvarez and Marsal (A&M) into the activities of the island’s two biggest banks which have led Cyprus to the brink of bankruptcy. 

His critics argue that the A&M investigation was restricted mainly to investigating the Bank of Cyprus rather than Laiki, despite parliament allegedly being told otherwise in a letter sent by Demetriades to Omirou last November.

CYPRIOT MPs yesterday agreed to disagree with their German counterparts on the Cyprus-troika bailout deal, following a meeting of the House Finance Committee with visiting members of Germany’s lower legislative house, the Bundestag. 

A delegation of seven German MPs from across the political spectrum met with the Cypriot finance committee to discuss the pending €23 billion rescue package which still needs final approval from EU finance ministers followed by the endorsement of some national parliaments, including those of Germany and Finland. 

The German Bundestag is due to discuss the Cyprus rescue package, which includes a €10 billion bailout from the troika and a €13 billion Cypriot contribution or ‘bail-in’ next week.

Based on comments made by Cypriot MPs after yesterday’s meeting with their German counterparts, it appears the positions of the two national parliaments are miles apart on the handling of the latest eurozone crisis with German lawmakers reportedly keen on “destroying” the Cyprus economic model. 

House Finance Committee Chairman Nicolas Papadopoulos said the Cypriot deputies clearly conveyed their position that the solution imposed on Cyprus by its European partners was unfair and irrational, at least from a financial perspective. 

“Unfair because it is a solution which has not been applied anywhere else in the eurozone and certainly not for other European banks that faced similar problems in recent years,” he said. 

Papadopoulos argued it was financially unsound because it has forced Cyprus to take on an unbearable burden. 

The solution imposed by EU partners has likely inflicted “irreparable” damage on an important sector of the Cypriot economy accounting for 40 per cent of state revenue. This loss of revenue will lead to greater austerity which will hit ordinary households with low incomes and lead to increased unemployment, all because of a solution which makes no sense. The solution is destroying the economy in order to save it, he added. 

According to the committee chairman, the German MPs maintained their known positions regarding the need to provide similar bailout packages in other eurozone countries in trouble. 

“They were clear that they agree with the philosophy and approach to the haircut on deposits because they believe this should be the future model for all banks facing problems. They have sent a message that Spanish depositors, Italian, Portuguese and perhaps Greek too will likely face the same approach,” he said.

DISY’s Prodromos Prodromou said there was a noticeable difference in perception between the two sets of national MPs.  

For the German delegation, the aim was to put an end to the Cyprus economic model.   

“That’s why we’re talking about different perceptions and unfortunately, a large dose of misinformation,” he said, adding that Cyprus needed to make the most out of EU budgets now to ease its economy’s suffering. 

AKEL MP Pambos Papageorgiou said everyone came out of the “honest” discussion more pessimistic than before. 

“For the Germans, matters are clear. For them, our banks were a form of gambling which had to be destroyed and for which depositors, whom they consider gamblers, should pay. Our economic model must be destroyed because it’s based on tax evasion and what is clear is that they have no alternative proposal for us following this destruction. In other words, if more money is needed to deal with this situation, it should come from the Cypriot taxpayer and not the EU taxpayer,” he said.  

Papageorgiou argued that European demands on Cyprus will increase, and “wherever there is hope of economic recovery, they will kill it”. 

THE FIRST of a new batch of bailout-linked bills tabled to parliament yesterday includes scaled cuts in public sector salaries and pensions, a hike on the corporate tax rate from 10 to 12.5 per cent and an increase to 30 per cent of the tax rate on interest income.

The fiscal measures are necessary for the government to qualify for a €10 billion bailout from international creditors following an agreement struck last month. More bills are on the way.

Although the public-sector wage reductions will last until 2016, as previously agreed, a key difference is that now these reductions are specified as cutbacks, not ‘contributions’ as was the case in the previous MoU between Cyprus and the troika - European Commission, European Central Bank and International Monetary Fund. That’s because the troika insists the reductions should be effected in a way that impacts (lowers) pensions as well.

Crucially, a new law on Immovable Property Tax (IPT) needs to be brought to parliament and passed as soon as possible. Under the deal reached with the troika, passage of the IPT law is a precondition for the lenders to release the first tranche of bailout money.

The IPT bill has still to be tabled to the House, but it’s understood that the text is all but ready and will be put to a vote at the plenum next week.

Interior Minister Socrates Hasikos informed MPs that the bill has been designed to yield additional revenues of at least €75m.

He did not disclose details. It’s speculated, however, that the extra revenues would be achieved by updating the 1980 real estate prices through application of the consumer price index for the period 1980 to 2012, and/or amending value bands.

Hasikos said also that his ministry was looking into the possibility of reducing the number of municipalities, through outright mergers of municipalities and/or consolidation of departments across different municipalities.

The minister revealed plans to attract investors from non-EU countries through relaxing investment requirements for Cypriot citizenship.

Currently, to obtain a Cypriot passport, such foreign nationals must retain deposits here valued at €15m, or alternatively have deposits of at least €10 million plus engage in investment activities on the island.

The deposits threshold could be lowered to anywhere between €3m and €5m, Hasikos said.

Moreover, applications for citizenship would be expedited so that they are processed and approved within 40 days, Hasikos said.

According to the minister, this measure was targeted especially at Chinese nationals. So far, he said, some 1000 residences have been sold to Chinese businesspeople.

Other expected measures will be geared at containing health expenditure; abolishing the category of beneficiaries class ‘B’ and all exemptions based on all non-income related categories (except for persons suffering from certain chronic diseases depending on illness severity); and introducing a compulsory health care contribution for public servants and public servant pensioners of 1.5 per cent of gross salaries and pensions.

Interior Minister Socrates Hasikos briefed MPs at the House Interior Committee yesterday (Christos Theodorides)

THE CYPRUS bailout will be top of the agenda at a two-day meeting of EU finance ministers in Dublin beginning today. No doubt they will be told what’s really going on while the people of Cyprus continue to be kept in the dark.

While we’ve been distracted by capital controls, lists of people who took money out before March 15, investigations into who was responsible for the demise of the economy, and a political row over who ordered a draft haircut law the day before, and just when you thought it could not get any worse, the bailout jumps from €17.5 billion to €23 billion while we were not looking.

Where Cyprus was initially to contribute €5.8 billion, then €7.5 billion, to the bailout, this has been hiked to €13 billion with no explanations offered to the people – the victims of this grand theft. A bigger outflow than originally estimated from the banks was cited as possibly one of the reasons. In addition, reports have surfaced that the bulk of the island’s gold reserves would be sold for a paltry €400 million.

None of this news originated in Cyprus. It came in a Reuters report based on draft official European Commission documents outlining the island’s financial needs. The only reaction from within the island was a Central Bank denial that the gold sale was not under discussion, and a comment from the government spokesman yesterday that it was an issue between the Cypriot and European central banks. On the €23 billion, the spokesman simply blamed the previous government and the banks without giving any details.

It’s becoming increasingly hard for anyone to figure out what the real facts are other than the certainty that we are in a worse mess than anyone could possibly have imagined.

It is probably too much to ask that the ‘government of change’ come clean and tell the people who have been robbed of their money, jobs, and standard of living what is really going on, how much money is really needed and how this will affect their lives.

President Nicos Anastasiades has gone on television a couple of times to tell us that everything will be all right. Clearly he is delusional, lying through his teeth, or wants to spare us from how bad it really is with soothing words devoid of any real meaning given the whiff we’ve had of the real facts on the ground.

At a time like this, people don’t want to hear political rhetoric about some imaginary golden future where we are living happily ever after on a cloud of natural gas. People want to hear the truth about what is happening to their country now so they can make up their own minds and take decisions about their futures, or in this case, the lack thereof.

It’s the least people deserve before we are all called on to line up and donate a kidney to raise more cash for this bottomless pit of a bailout because people really have nothing else left to give.

THE government yesterday put the blame squarely on the previous administration for the spectacular increase in the bailout cost for Cyprus within the space of a few months.

In doing so, the DISY-led administration appeared to be confirming a draft assessment prepared by the European Commission, revealed by Reuters on Wednesday, according to which Cyprus’ total financing needs now stand at €23bn.

By contrast, the preliminary bailout agreement struck between international lenders and the previous administration last November was thought to be worth €17.5bn to which international lenders would contribute €10 billion and Cyprus the remainder.

Now Cyprus must stump up €13 billion. 

At a news briefing yesterday, government spokesman Christos Stylianides pointed an accusing finger at the previous government of Demetris Christofias.

“Who is responsible? How did we get from there to here? It was the fear of taking responsibility and a total lack of decisive action on the part of the previous government,” he said.

Asked what accounted for the additional €5.5bn on the tab, Stylianides said this “clearly has to do with the banking sector. “When you have so many withdrawals from Cypriot banks, unfortunately that’s how you get to the new figure,” said Stylianides.

He was evidently alluding to the flight of billions of euros from Cyprus since January when talk of a possible haircut on deposits picked up pace.

He went on to say that the €23bn number “has been taken into consideration, and that is why we proceeded to the next phase of decisions at the Eurogroup of March 24.”

The European Commission document said that of the total financing needs of €23bn between the second quarter of 2013 and the first quarter of 2016, the eurozone bailout fund will provide €9bn, the International Monetary Fund €1bn and Cyprus itself will generate €13 billion.

Cyprus would raise €10.6bn from the winding down of Laiki Bank and the losses imposed on junior bondholders and the deposit-for-equity swap for uninsured deposits in the Bank of Cyprus.

It said also Nicosia was “committed” to sell excess gold reserves to raise about €400 million, and would raise a further €600 million over three years from hiking the corporate income tax rate and the capital gains tax rate.

The document bore the date of April 23, 2013, indicating this will be the date when the eurozone is likely to formally sign the bailout agreement with Cyprus. If all goes according to plan, Cyprus could receive the first tranche of aid money in May.

Under the first MoU drafted in November, it was understood that Cyprus would have contributed around €7bn of the €17.5bn.

Stylianides said the new MoU concluded between the current administration and the troika of international lenders provides for €1.2bn to recapitalise co-operative banks; this was part of the €10bn to be put up by the eurozone, via the European Stability Mechanism (ESM), and the International Monetary Fund.

Stylianides said also the sale of gold reserves was among the options for Cyprus’ own contribution towards an international bailout, but said the ultimate responsibility for that rested with its Central Bank.

“The Cypriot government put various options forward, including this,” he said.

“In its consultations on drafting the memorandum of understanding the Cypriot government included such options so we could have the possibility of meeting financing requirements,” he said, adding that it was “one of many tools.”

Earlier, however, a Central Bank spokeswoman said the sale of gold reserves had to be approved by the board of the Central Bank, and it was not presently on the board's agenda.

It was not the only miscommunication between the government and the banking regulator over the past 24 hours.

Earlier in the day, communications minister Tasos Mitsopoulos said the Presidency could not get in touch with Central Bank governor Panicos Demetriades on Wednesday night.

The Presidency had wanted to discuss with the central banker a number of “important issues,” including a further relaxation of capital restrictions.

But according to Mitsopoulos, the CB governor had gone AWOL: “The President sought a number of clarifications on crucial matters of the economy, but Mr. Demetriades could not be reached on his mobile, his house or his office. We were unable to reach him despite several attempts.”

Later yesterday the CB released a statement explaining that the governor had on Wednesday evening flown out to Dublin, where he will be attending a summit of eurozone central bankers.

The President and the governor spoke “at length” on the phone later in the day (Thursday), the statement added.

On the capital restrictions in place, the government spokesman stressed the need to ease them as soon as possible: “Capital needs to be liberated so that the market can re-energize and return to normalcy.”

The Finance Minister last night issued yet another decree – the sixth in a series – capping the movement of capital internally at €300,000. The previous decree set a cap of €2,000 a month per bank for individuals and €10,000 for legal entities.

A political endorsement of the economic adjustment programme for Cyprus is expected at an informal meeting of euro-area finance ministers in Dublin today and tomorrow.

Stylianides said t was the fear of taking responsibility and a total lack of decisive action on the part of the previous government

Following is the text of the Eurogroup's statement on Cyprus following a meeting of eurozone finance ministers in Dublin on Friday.

"The Eurogroup welcomes the staff-level agreement that has been reached between Cyprus and the Troika institutions on the policy conditionality underlying the macroeconomic adjustment programme. The agreement is fully in line with the parameters and key objectives set by the Eurogroup on March 25.

"The Eurogroup notes with satisfaction that the Cypriot authorities have implemented decisive bank resolution, restructuring and recapitalisation measures to address the fragile and unique situation of Cyprus' financial sector. The Eurogroup commends the authorities for their demonstrated resolve in implementing these important measures in a tight timeframe and reiterates its appreciation for the efforts made by the Cypriot citizens over the last weeks.

"The Eurogroup is confident that determined action in line with the reform measures spelled out in the MoU will allow the Cypriot economy to return to a sustainable path based on sound public finances, balanced growth and financial stability.

"The Eurogroup welcomes the progress with the AML audit by Moneyval and an independent auditor, together with the commitment in the MoU to further enhance AML measures following the audit report recommendations.

"The Eurogroup considers that the necessary elements are now in place to launch the relevant national procedures required for the formal approval of the ESM financial assistance facility agreement for an amount of up to EUR 10 bln, subject to IMF's contribution. The Eurogroup takes note that the IMF's Board is expected to consider in early May Cyprus' request for a 3-year Extended Fund Facility of an amount of about EUR 1 bln. The ESM amount would then consequently be up to EUR 9 bln. The Eurogroup looks forward to the finalisation of the negotiations between the Cypriot and Russian authorities on the restructuring of the loan granted to Cyprus by the Russian Federation.

"The Eurogroup expects that the ESM Board of Governors will be in a position to formally approve the proposal for a financial assistance facility agreement by April 24, 2013, subject to completion of national procedures. The first ESM disbursement is subsequently scheduled to take place by mid-May, by when the AML audit is expected to have been concluded."