Troika Bailout Talks with Cyprus to Continue - Statement

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 [e-mail]