Cyprus seeks financial aid from EU

Cyprus has sought a financial lifeline from the eurozone’s firewall funds, becoming the fifth of the euro’s 17 member states to request a bailout.

“The purpose of the required assistance is to contain the risks to the Cypriot economy, notably those arising from the negative spillover effects through its financial sector, due to its large exposure to the Greek economy,” the Cypriot government said yesterday in a statement distributed by the press and information office in Nicosia.

The request will be limited to support for banks, which need less than €6bn, in hopes of securing aid with fewer conditions than a full-fledged economic rescue package, according to a person familiar with the talks. The government still believes it could get a loan from China or Russia, which it might use to improve its bargaining position, the person said, declining to be identified because the talks are confidential.

Cyprus, which takes over the EU’s rotating presidency on July 1, follows Greece, Ireland, Portugal, and Spain in seeking help to return to financial health. The third- smallest euro economy has been hurt by losses from Greece’s recession and debt restructuring.

The IMF, which has participated in previous eurozone rescue programmes, has not received a financial aid request from Cyprus, Conny Lotze, a spokeswoman for the fund, said by email. &

Cyprus, which joined the EU in 2004 and the euro in 2008, defied European pressure to make a request before the Greek election on June 17, one of the EU officials said.