Cyprus facing heavy shortfall

Money
People withdraw money from a cash machine of a Bank of Cyprus branch in the capital, Nicosia, on April 8, 2013. Picture: AFP

NICOSIA - Cash-strapped Cyprus will fall short by at least 75 million euros ($97 million) to pay its bills this month, including government salaries and pensions, an official warned on Monday.

Accountant General Rea Georgiou told parliament's finance committee that the government was trying to avoid a payment default for the month of April.

"The cash deficit for April is 160 million euros. The 85 million in reserve is not enough and we need a similar amount to avoid a default," Georgiou said, as the island awaits the first tranche of a eurozone bailout due in May.

Government spokesman Christos Stylianides told reporters the authorities were rushing to avoid a default on payments on state salaries and pensions, including pushing through additional bailout measures to raise funds.

"This government will do whatever is possible in the coming days to get bills passed relating to the [bailout] so we do not have a problem with salaries and pensions at the end of the month," he said.

"I want to believe that right now, everyone will show the necessary prudence to provide opportunities and safeguards so that the state has the possibility of funding."

Under the 10-billion-euro bailout deal struck with the European Union, European Central Bank and International Monetary Fund to prevent financial meltdown, Cyprus is obliged to drastically reduce the size of its bloated banking sector, raise taxes and downsize the public sector workforce.

-Sapa

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