Correct: Tanzanian Bank saves Cyprus from Insolvency

- Corrects Bank Origin To Tanzania

FRANKFURT (MNI) – The Cypriot government has managed to push back the threat of near-term insolvency thanks to the purchase of E240 million in government bonds by a bank in Tanzania, the German daily Die Welt reports.

According to the newspaper, the bonds were initially to be repaid by  November 4, which would have left the Cypriot government insolvent before year-end. However, the Federal Bank of the Middle East has renewed the bonds, thus allowing the government to push back repayment, Die Welt said.

As the Tanzanian financial institution seeking a banking license to operation in Cyprus and likely to get it, the opposition is concerned. “We hope that the banking license was not a condition for the government bonds to be renewed,” opposition leader Averof Neophytou was quoted as saying.

Heavy exposure to the Greek banking system, as well as severe damage to Cyprus’ biggest power plant last year, has left the Cypriot government with a huge financial burden and requesting assistance from a number of sources,
including Russia and the European bailout fund.

While Cyprus has managed to obtain some funds from Russia, a decision regarding a European bailout is unlikely before next year, a German Finance Ministry spokesperson said on Monday.

Speaking at a regular government press conference in Berlin, ministry spokesperson Martin Kotthaus noted that talks with Cyprus were progressing at a rather moderate speed, which means “a completion before the year 2013
will likely be difficult.”

– Frankfurt bureau: +49 69 720 142; email: twailoo@mni-news.com

source: Forexlive.com