The financial rescue package for Cyprus will involve the International Monetary Fund and will be tied to strict conditions of fiscal policy, bank deleveraging and structural reforms, euro zone finance ministers said in a statement Wednesday.
The involvement of the IMF appears to end any hopes the Cypriot government had about being able to channel rescue funds directly into its banks without the sovereign having to accept liability.
It also appears to signal an end for now to Cypriot efforts to source funds with fewer strings attached from Russia and China.
The statement did not commit the currency union to using any specific vehicle for the aid package, which is likely to be far smaller than the bailouts for Greece, Ireland and Portugal. Cypriot officials have spoken of 10 billion euros maximum.
The ministers said the funds would be provided either by the existing European Financial Stability Facility or by the upcoming European Stability Mechanism.
(source: Dow Jones)
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