Greek Cyprus enjoys 2.5 billion euro Russian ‘gift’

NICOSIA - Anatolia News Agency

Children participate in a demonstration in Nicosia against budget cuts in Nicosia Dec 14. Greek Cyprus is seeking to overcome its economic hardships with foreign loans. REUTERS photo

Russia and Greek Cyprus have signed a loan deal of 2.5 billion euros Dec. 24 to cover the Greek island’s short-term financial needs.

The first tranche of the credit, 590 million euros, will be released before Dec. 31, according to officials. Another 1 billion euros is scheduled to be released in February 2012. Greek Cypriots will receive the remaining amount in March.

The loan deal, with an interest rate of 4.5 percent and 4.5 year repayment period, was signed by Greek Cypriot Finance Minister Kikis Kazamias and Russian Deputy Finance Minister Sergei Storchak. Greek Cyprus has a right to early loan repayment with no extra costs, ITAR-TASS, the official Russian news agency, said.

The Greek Cypriot press hailed the loan as a “Russian gift,” “Christmas gift” and “Happy Christmas from Moscow” in headlines. “Russian credit came as Greek authority is passing through a hard time, and the loan will be mainly spent on financial needs in 2012 and some of it will used to support financial institutions,” Haravgi, a Greek Cypriot newspaper, said.

Greek Cyprus needs 3.6 billion euros as many debts are due in 2012, and this grim situation causes concern on public finance at a time when international markets have left the country in the cold, a weekly Greek Cypriot paper Kathimerini said.

Two and a half billion euros of debt is to be paid in one go in 2012, and the Russian loan is not enough to cover the financial needs for 2012, the paper said.