Merkel: Cyprus must embrace reforms to get bailout

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Associated Press

Posted on January 11, 2013 at 9:34 AM

Updated Friday, Jan 11 at 10:02 AM

LIMASSOL, Cyprus (AP) — German Chancellor Angela Merkel says Cyprus must move ahead with economic reforms so it can garner support for a rescue package that it's trying to finalize with international creditors.

As she arrived for a European conservative parties' conference in Cyprus, Merkel said Friday that the country needed to embrace reforms if it hoped to get any bailout.

Cyprus has already enacted public sector pay cuts and tax rises as part of a draft bailout deal it has negotiated with the European Commission, the European Central Bank and the International Monetary Fund. It is resisting calls for privatizations, however.

Cypriot banks took huge losses on bad Greek debt and loans and their rescue needs are still being calculated. The estimate will affect the size and terms of Cyprus' bailout deal.

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