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Russia to revise $3.2 bn loan to Cyprus
March 26, 2013, 8:41 am

[AP]

Cyprus have agreed to raise around 4.2 billion euros through measures including a levy on uninsured deposits larger than 100,000 euros [AP]

Russia will consider restructuring its multi-billion euro loan to Cyprus, says President Vladimir Putin’s spokesman, possibly giving the island more breathing room hours after it secured a eurozone bailout.

Putin told the government to revise the terms of the 2.5 billion euro ($3.2 billion) loan granted in 2011 to assist Cyprus in overcoming its economic crisis, Dmitry Peskov told reporters.

Earlier in the day, finance ministers from the 17-nation euro area committed to a 10 billion euro deal to rescue Cyprus and its outsized banking sector from collapse.

That deal followed an agreement for Cyprus to raise around 4.2 billion euros through measures including a levy on uninsured deposits larger than 100,000 euros at the nation’s second largest lender, the Popular Bank of Cyprus.

This was a revised version of a revenue-raising exercise pushed for by prospective international creditors.

Lawmakers in Cyprus last week overwhelmingly rejected proposals to impose a windfall levy on domestic bank accounts that envisioned sequestering 6.75 per cent of deposits under 100,000 euros.

The same bill would have required a 9.9 per cent levy on larger deposits.

Jeroen Dijsselbloem, president of the Eurogroup of finance ministers, said in Brussels on Monday after the announcement of the revised bailout deal that Cypriot authorities should continue talks with Russia on financial aid.

He said he hoped Moscow would eventually contribute to international assistance for the 1-million strong Mediterranean nation.

Cyprus had asked Russia for a fresh 5 billion euro loan last year to partially cover its budget deficit and also requested a five-year extension to the 2011 loan.

Moscow has said it is worried over Cypriot authorities’ plans to force losses on the holders of accounts at local banks where Russian companies and individuals reportedly hold over $30 billion – about a third of all deposits.

Ria Novosti

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