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Cyprus aims for 11.5 bln euro bailout package

Associated Press Modified: October 4, 2012 at 12:46 pm •  Published: October 4, 2012

The Finance Ministry is also looking to incorporate into a bailout agreement a €2.5 billion Cyprus it secured from Russia last year when it was locked out the international bond markets by prohibitively high interest rates. Cyprus has also asked Moscow for another €5 billion.

Overall, the Cypriot government bailout target represents almost two thirds of the country's annual economic output.

Troika officials are expected back on the island later this month to conclude a bailout deal. Cyprus' left-wing government is resisting the troika's harsh austerity measures — estimated at almost €1 billion ($1.29 billion) — including a 15 percent pay cut for public sector employees.

Cyprus President Dimitris Christofias said Wednesday that he wouldn't sign off on a bailout deal that would privatize profitable state-owned companies or scrap end-of-year bonuses and inflation-based pay rises because of the effect that would have on the domestic economy.

In Brussels, European Commission spokesman Olivier Bailly said the EU's executive arm would await the Cypriot government's counterproposals, which will be discussed with opposition parties and union leaders over the next week.

The counterproposals aim to achieve the level of spending cuts that the troika wants to see, but stretched over four years instead of three while public-sector pay cuts will be scaled to avoid hurting low-income earners.