January 11, 2013 / 1:20 PM / 5 years ago

Merkel urges Cyprus to reform, says EU must show solidarity

LIMASSOL, Cyprus, Jan 11 (Reuters) - German Chancellor Angela Merkel said on Friday Cyprus must pursue economic reforms but also deserved “solidarity” from the European Union.

Germany, Europe’s paymaster, has expressed concerns about providing bailout funds for Cyprus because of a lack of transparency in its financial sector. The Mediterranean island is a popular tax haven for wealthy Russians.

“I would like to note that Cyprus must move forward with reforms to the economy but on the other hand we must show solidarity,” Merkel told reporters as she arrived in the island for talks with other EU conservative politicians.

Cyprus applied for a financial rescue last June after its banks suffered huge losses on the EU-approved writedown on Greece’s debt. Ratings agency Moody’s slashed Cyprus’s credit rating three notches on Thursday on an expected rise in the island’s debt burden.

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