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Cypriot officials say the government is keen for a deal by mid-November. Without that, there is speculation that the island of one million inhabitants could face a cash crunch as early as December. But with elections looming in four months and unwilling to take the flak for any fallout from unpopular austerity measures, the leftist government has apparently been biding its time on taking a stand on lenders' austerity proposals pending since July 25.
It is unclear how much aid Cyprus may require. The island has been unable to fund itself since it was shut out of capital markets 18 months ago. There is widespread speculation Cyprus's bailout will exceed €10 billion, or 60 per cent of its GDP. Cyprus's fiscal requirements until 2015 amount to about €5 billion.
In measures expected to generate €975 million in savings, the troika has asked for cutbacks to an inflated public sector payroll, pension reform and creation of a 'bad bank' to assume problem exposures of the financial sector, mainly in Greece.