According to a document prepared by the troika of Cyprus’ lenders, Russia has agreed to extend the maturity on its loan to Cyprus by two years and reduce the interest rate by 2%
Russia has agreed to extend the maturity and reduce the interest on its loan to Cyprus, a document prepared by international lenders showed, providing additional but expected financial relief to the island on top of an EU-IMF bailout.
Cyprus had complied with all conditions set by international lenders for the first 3bn euros of the 10bn euro bailout to flow to Nicosia later in May, said the April 30 document, drawn up by the troika of the European Central Bank, the European Commission and the IMF.
Russia lent Cyprus 2.5bn euros in 2011 for five years, with an annual interest rate of 4.5%. Extending the loan and reducing the interest will ease debt servicing costs for Nicosia and help it regain financial stability.
“Reassurance has also been obtained from the Cypriot authorities that formal agreement has been reached between the Republic of Cyprus and the Russian Federation on an extension by two years of the maturity for the Russian loan, which will be reimbursed as of 2018, and a reduction of the interest rate from 4.5% to 2.5%,” the document said.
Cyprus secured a three-year bailout from the eurozone’s ESM bailout fund and the International Monetary Fund (IMF) last month, becoming the fifth country in the single currency area to seek eurozone financial help as a result of the sovereign debt crisis.
“All prior actions are now compliant both on substance and on procedure,” the document said.
