BRUSSELS--Cyprus will continue talks with the European
Commission, the European Central Bank and the International
Monetary Fund to secure a bailout, the three institutions said in a
statement Friday.
The bailout, set to be the fifth in the euro zone, will mainly
focus on recapitalizing the island nation's banks. The statement
said the specifics of that part of the aid would become clearer
after the preliminary results of a due-diligence exercise are
published "in a few weeks."
Hinting to the IMF's insistence to only get involved in bailouts
that result in a manageable debt load over the medium-run, the
statement noted that Cyprus's financing solutions would be
"consistent with debt sustainability."
The troika has been in talks with the Cypriot government in
Nicosia for months, following a preliminary bailout request over
the summer. But the negotiations have at times been fraught,
leading to delays.
On Thursday night the Cypriot press and other outlets had
reported that the bailout deal had been finally struck. The
country's president, Dimitris Christofias, said Thursday that a
deal was "very close."
But the statement Friday indicated that work was yet to be done.
It said the experts would continue their talks "from the respective
headquarters" of the three institutions.
"The authorities and EC/ECB/IMF teams made good progress towards
agreement," the statement said.
Earlier Friday Fitch Ratings downgraded three Cypriot banks on
the grounds that they desperately needed to be recapitalized or
face failure.
Write to Matina Stevis at matina.stevis@dowjones.com