The International Monetary Fund held off today from commenting on reports according to which, the IMF is asking for a “haircut” on the Cyprus debt. The office of the IMF Spokesman Gerry Rice refers to his statement on December 13 that talks between the Cypriot authorities, the IMF and the European partners continue in order to find a financial solution for Cyprus that will be compatible with a sustainable debt level. “We are not expecting those talks to conclude this year” Rice had said.
Senior Director of Capital Markets and Emerging Markets Policy at the Institute of International Finance (IIF) Hung Tran, in statements to the Dow Jones Newswires, said that the majority of Cypriot government bonds are held by the local financial institutions, warning that a Cyprus debt “haircut” would directly impact the amount Cyprus needs to recapitilise its banking sector and lead to “economic dislocation”.
It should be avoided because it will only create instability, Tran said, also noting that a “haircut” would cause turmoil in the Eurozone. — (KYPE)
IMF avoids commenting on Cyprus debt “haircut” report