NICOSIA, Cyprus (AP) — Cyprus needs to speed up negotiations with its potential creditors on a deal that would enable the cash-strapped country to receive international financial aid and tackle its "very serious" problems, the chief of the 17-nation eurozone said Friday.
Jean-Claude Juncker said there is "no time to lose" on reaching a bailout deal with the European Central Bank, International Monetary Fund and the European Commission — collectively known as the troika.
"I'm very confident that an answer to the problems of this country, which are very serious, will be found in the next coming weeks," Juncker said after talks with Cypriot President Dimitris Christofias on the sidelines of an informal meeting of eurozone finance ministers here.
Cyprus in June joined fellow eurozone members Greece, Ireland and Portugal in seeking an international bailout to recapitalize its banks which have taken huge losses due to their heavy exposure to debt-crushed Greece.
The Cypriot government effectively took over the island's second-largest lender and most Greece-exposed, Cyprus Laiki Bank after buying up nearly €1.8 billion ($2.32 billion) worth of its shares to help it meet EU-set capital buffers when the bank couldn't raise the cash on its own.
But it is money the country doesn't have because its junk credit rating prevents it from tapping international markets. Instead, Cyprus turned last year to close ally Russia for a €2.5 billion ($3.23 billion) loan to pay its bills, but that money has run out. The country has another €5 billion ($6.46 billion) loan request to Moscow pending.
Cypriot authorities have held two rounds of talks with Troika officials in July and despite conceding that austerity measures will be "painful," they are reluctant to accept steep salary cuts to the public sector that swallows up almost a third of all government spending.
Christofias' leftist government wants to clinch the support of trade unions before going ahead with another round of negotiations with troika officials in order to avoid any social unrest.
Finance Minister Vassos Shiarly brushed off concerns over a perceived delay in clinching a bailout deal, saying that he will get in touch with troika officials next week to set a date for their return.
"If some people have expressed the view that we may be a little bit delayed, I just remind those people that don't forget that August is a holiday season and don't forget also that during the last 15 days we virtually did nothing else but prepare for these (eurozone finance ministers') meetings," Shiarly told reporters.