Moscow, Nicosia in talks on favorable loan to Republic of Cyprus.

NICOSIA, September 10 (Itar-Tass) -- The Republic of Cyprus is hoping
to get a favorable loan from Russia to finance its debt obligations.
Negotiations on this issue are under way between the two governments, the
Russian Embassy in Cyprus confirmed to Itar-Tass. But the diplomats did
not disclose the details of a future agreement, since they are a subject
matter of on-going discussions.
Finance Minister Kikis Kazamias also confirmed today that his
government "is in contact with Russia with the aim of getting a loan on
favorable terms." The exact amount, he said, is not defined yet. "Our goal
is to collect 2.5 billion euros, but that will be not only Russian money,"
he said. "We are in talks with other friendly countries."
Local media reported on Friday that negotiations between Moscow and
Nicosia were being conducted on a five-year loan at a 4.5-percent
interest. The Cyprus government expects that these funds will help the
the
country to cover debt liabilities of about 2 billion euros, maturing in
October, January and February.
The recent months saw a sharp increase in the cost of foreign
borrowing in Cyprus after all major ratings agencies downgraded the credit
rating of the country, explaining their decision by the republic's
significant involvement in the financial problems of Greece. The economic
problems of the island worsened after the tragic explosion at a military
base on July 11 that put out of order the country's largest power station,
bringing the republic to the brink of an energy crisis. The yield on
Cyprus's five-year government bond rose in recent days to 15.5 percent.