Cyprus is in talks with Russia on investments in its banks and energy resources to reduce its debt burden, as well as seeking an extension to an existing Russian bailout loan, Finance Minister Michael Sarris said on Thursday.
"The banks are the ultimate objective in any support we get, so it'll either be a direct support to the banks or the support that we get through other sectors will be channeled to the banks, because this is our biggest challenge to recapitalize the banks," Finance Minister Michael Sarris told Reuters.
Cyprus needs to find 5.8 billion euros ($7.51 billion) to avoid having to impose a tax on bank deposits, a condition of unlocking a 10 billion euro European Union bailout.
Sarris said that Cyprus was seeking a five-year extension of an existing loan of 2.5 billion euros from Russia, and a cut in the interest rate to 2.5 percent from 4.5 percent. He said Cyprus did not want to borrow more money from Russia.
"There are no stumbling issues, there's just work to be done. Understandably, if there is to be help, it has to be connected with a number of economic activities," said Sarris.
Sarris was holding a second day of talks with Russian officials after the Cypriot parliament on Tuesday threw out a proposal to tax bank deposits. The islands banks remain shut to prevent a run.
($1 = 0.7722 euros)
(Reporting by Lidia Kelly; Writing by Maria Kiselyova; Editing by Douglas Busvine)