President of the Republic of Cyprus Demetris Christofias will address the nation soon on the agreement reached between the government and the representatives of the European Commission, European Central Bank and International Monetary Fund, also known as the Troika, on the loan Memorandum.
A press release issued by the Presidency, following a statement made yesterday by President Christofias, noted that “the Republic of Cyprus and representatives of the Troika reached a convergence on the proposals which will formulate the loan memorandum between Cyprus and the European Stability Mechanism (ESM).”
According to the press release, the total amount that will be needed for the recapitalization of financial institutions is expected to be known at the beginning of December, based on the interim report which will be submitted by the organization which has been assigned to prepare an independent report on the recapitalization needs of the financial sector.
“This development allows for the further advance of the process, so as to secure the approval of a Memordum of Understanding (MoU) from the Eurogroup in December,” the Presidency added.
Following that, the MoU will have to be approved by the competent authorities and/or the parliaments of the Eurozone Member-States, a process expected to be completed by the end of January 2013.
After the MoU is approved Cyprus “will be able to draw from the ESM the liquidity that is needed to help the Cypriot economy overcome the problems that it’s currently facing”, the release noted.
Cyprus applied on June 25 for financial assistance from the EU bailout mechanism to rescue its banking sector which posted mammoth losses as a result of its heavy exposure to the Greek economy and to secure the state`s refinancing needs.