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Cyprus last week paid 312.5m to the Russian Federation as a first instalment of a €2.5bn loan agreed more than six years ago and restructured in 2013, a finance ministry source said.

The loan, agreed in late 2011 by the government of former president Demetris Christofias, which lost access to financial markets and was trying to avoid requesting a bailout from the European Union and the International Monetary Fund (IMF), will be repaid in eight biannual instalments of €312.5m. The next payment is scheduled in September.

The Russian loan accounted in September for 13 per cent of the total public debt of €18.8bn, according to the latest available figures on the website of the Public Debt Management Office.

As part of the initial loan agreement, Cyprus had to pay a 4.5 per cent annual interest on the borrowed amount and repay it in one instalment in 2016. The restructuring of the loan provided for a reduction of the interest rate to 2.5 per cent and the extension of the repayment period to 2021.

In November, the government which last year generated a budget surplus of €360.7m on a cash basis, also made a €614.9m payment against a loan from the Central Bank of Cyprus, reducing the debt to gross domestic product (GDP) ratio below the 100 per cent mark.

Source: CyprusMail