Talks between Cyprus and the Troika negotiating a possible bail-out of the Cypriot economy are stalling because of a fundamental disagreement over privatisation of state-owned companies.
President Christofias has said that he will not agree to privatizations and that if the bailout creditors insist on privatizations as a condition of a deal, the accord would have to wait for the next government to sign it. Cyprus holds presidential elections on 17th February and Christofias is not seeking re-election. However, Cyprus' eurozone partners are scheduled to decide on the country's bailout deal on 21st January, which leads to an obvious timing issue. The Cypriot government claims it has enough cash to pay its bills until March 2013, and the new President will take the reins on 1st March. This leaves precious little time for any new incumbent to do all that is necessary to avert disaster.
It is not yet clear exactly how much cash the crippled Cypriot economy requires. External estimates put the figure required to shore up its banks at around €10 billion (more than half the value of the national economy) but the Cypriots claim the real figure is much lower. The picture should be clearer later this month, when international investment firm PIMCO and auditors Deloitte finish a review of the Island's financial situation.
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