The programme agreed between the troika of international lenders and the government of Cyprus puts forward comprehensive structural reforms to set the conditions for growth and job creation, Olli Rehn, European Commission Vice-President and Christine Lagarde, Managing Director of the International Monetary Fund said Wednesday.

In a press release issued Wednesday, Rehn and Lagarde noted that “significant challenges lie ahead for Cyprus”.

They added that the European Commission and the International Monetary Fund “stand by Cyprus and the Cypriot people in helping to restore financial stability, fiscal sustainability and growth to the country and its people”.

“The Cypriot authorities have put forward a multi-annual reform programme to address the economic challenges facing the country. Its goals are to stabilize the financial system and achieve fiscal sustainability in order to lay the foundations for a recovery of economic activity and the growth potential that will preserve the longer-term prosperity of the population” the press release said, noting that “the programme builds on important steps already taken by Cyprus to address the problems in the two largest banks and includes a set of measures aimed at ensuring a stable, sustainable and transparent financial sector”.

It added that “while the Cypriot government has already adopted important fiscal consolidation measures, the programme entails a well-paced fiscal adjustment that balances short-run cyclical concerns and long-run sustainability objectives, while protecting vulnerable groups. The social welfare system will be reviewed with the view to ensuring sustainability and social fairness”.

In the early hours of Monday, March 25, Eurozone Finance Ministers and the IMF agreed on a €10 billion financial assistance package after the Cypriot authorities agreed to wind down the Cyprus Popular Bank (CPB), the island’s second largest lender, and to restructure the Bank of Cyprus (BOCY), Cyprus’ biggest bank, after imposing losses on deposits above €100,000.

Government Spokesman Christos Stylianides announced that the Cypriot authorities and the Troika have concluded the Memorandum of Understanding on the economic policy conditionality for Cyprus` financial assistance package.

The loan will have an interest rate of 2.5% and will be repaid in 22 years.

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