* Cyprus says waiting for troika for final bailout deal
* Privatisation call resisted by leftist govt
* Island sought aid in June
* Troika still believes Cyprus proposals "insufficient"
(Adds troika document, paragraphs 4 and 5)
By Michele Kambas
NICOSIA, Nov 2 Cyprus remains at odds with
international lenders over privatisations and automatic wage
hikes, its finance minister said on Friday, but is optimistic
that a bailout deal will be brokered soon.
Vassos Shiarly said there were also differences with the
European Central Bank, International Monetary Fund and European
Commission - the troika - on recapitalisation needs of the
island's Greek-exposed banks.
"We are waiting ... to hear when they will come to Cyprus to
conclude the final round of negotiations... Now the ball is in
their court," Shiarly told reporters in Nicosia.
A document obtained by Reuters in Berlin showed that in the
view of the troika, Cyprus's proposals on a possible memorandum
of understanding were "insufficient".
"The Eurogroup working group has again urged Cyprus to
cooperate with the troika," the document said.
Cyprus applied for an EU and IMF bailout in June after its
two largest banks sought state aid to help with massive losses
incurred by the Greek debt writedown earlier in the year.
The island has been unable to borrow from international
financial markets for more than a year because of high yields on
its traded debt.
Shiarly said Cyprus had held "long-distance" talks with
representatives of the ECB, the IMF and the European Commission
and was expecting them to set a date to come to the island to
resolve "no more than five" outstanding issues.
He said the issues yet to be resolved included the troika's
call for privatisations, its demand that wage indexation be
scrapped, the supervision method of co-operative banks, and the
recapitalisation needs of the banking system.
Privatisations and scrapping wage indexation, known as cost
of living adjustments or CoLAs, are a red flag for Cyprus's
leftist government, deeply rooted in the labour union movement
and which faces a national election in February.
"I'll say it from now, I am ready to take to the streets
with the workers to defend CoLA," Cypriot President Demetris
Christofias said last month.
The government has been careful to state it is against
privatisations of "profitable" state assets, such as Cyprus
Telecoms CyTA. That organisation pays dividends to the state on
its profits each year.
But in the case of other assets, like loss-making Cyprus
Airways, it is looking for a buyer.
Cypriot authorities believe the island needs about 5 billion
euros to recapitalise its banks, while the troika puts the
figure at about 10 billion, Shiarly told lawmakers on Oct. 3,
minutes of a meeting leaked to the media this week showed.
A more accurate picture of potential banking needs would
only be ready by mid-January, when an outside asset quality
review is completed, Shiarly said.
"The difference (in assessment) is not material right now
since whatever is decided between us and the troika on the
probable recapitalisation amount is preliminary. I don't think
that will be a thorny issue preventing the conclusion of a
memorandum," he said.
(Additional reporting by Matthias Sobolewski in Berlin; Editing
by Hugh Lawson)