WASHINGTON (Reuters) - Cyprus has asked the International Monetary Fund for financial assistance to help it deal with the country's banking crisis, the head of the IMF said on Wednesday.
"Today, the IMF received an invitation from the Cypriot authorities to participate in the external financial assistance to contain the risks to the Cypriot economy," IMF Managing Director Christine Lagarde said in a statement.
The request comes a day ahead of a crucial summit of European leaders on Thursday and Friday to deal with the ongoing euro zone debt crisis that has enveloped the continent.
It will be the fourth euro zone country that has turned to the IMF for a rescue loan. The fund is already involved in bailouts for Greece, Portugal and Ireland. It is helping to monitor a 100 billion euros ($124.71 billion) European bailout for Spain.
"We expect to send an IMF team to Cyprus to evaluate the situation in the field as soon as possible in preparation for discussions on an economic program that will help Cyprus meet the economic challenges it is facing," Lagarde added.
Cyprus has also requested an EU bailout for its second-largest lender, Cyprus Popular Bank, which needs 1.8 billion euros in regulatory capital. The aid is expected to amount to about 10 billion euros, according to EU officials. In exchange, Cyprus will have to commit to budget cuts and structural reforms, as well as steps to strengthen its banking and financial sector.
(Reporting by Neil Stempleman and Lesley Wroughton; Editing by James Dalgleish)