25 Nov 2012

Cyprus bailout deal makes progress

10:48 am on 25 November 2012

The European Union and International Monetary Fund say they have made good progress with Cyprus on a bailout deal to help prop up its banks and pay its debts.

They say the preliminary results of an investigation into the finances needed are expected within the next few weeks.

The BBC reports the deal is expected to include €17.5 billion of loans but would have to be ratified by parliaments in the eurozone countries. The figure is equal to the country's entire annual economic output.

Cyprus asked in June for help for its stricken banks which have suffered losses due to heavy exposure to neighbouring Greece.

According to the IMF, Cypriot banks have total outstanding liabilities and debt of €152 billion - eight times the size of the country's gross domestic product.

Cyprus has been unable to borrow from international markets for over a year because credit rating agencies lowered its sovereign rating to junk status.

Cyprus is the fifth country in the 17-member euro area to accept external emergency assistance.

Greece, Ireland, Portugal, and Spain have asked for bailouts, although Spain's banking rescue was funded by the eurozone's European Financial Stability Facility.