Cyprus has asked Russia for a five billion euro loan to partially cover its budget deficit, Russian Finance Minister Anton Siluanov said on Friday.
“We are now examining the Cypriot request for a loan,” Siluanov said.
Cyprus needs the funds to recapitalize local banks which are under stress due to the eurozone debt crisis. International rating agency Moody’s cut the ratings of Cyprus’s two largest banks, Bank of Cyprus and Hellenic Bank, in June, and put the island’s third largest bank, Cyprus Popular Bank, on review for a possible downgrade.
Last year, Russia agreed to grant Cyprus 2.5 billion euros in loans, which amounts to about 10 percent of the republic’s GDP.
Cyprus also asked China and the EU for financial help in late June. The troika of international lenders comprising the European Commission, European Central Bank and the International Monetary Fund is likely to visit Cyprus soon for negotiations on possible loans.
The Cypriot state debt amounted to 71.6 percent of the country’s gross domestic product in 2011.