The Eurogroup welcomed on Monday the Troika`s (IMF, EC, ECB) conclusion following its third review mission in Cyprus, saying that Cyprus has complied with the prior actions agreed and that the disbursement of the next tranche of 150 million euro is scheduled by the beginning of April. Concurrently, the IMF Executive Board is expected to decide on the disbursement of 86 million euro.
The finance ministers of the Eurozone were informed by the Troika and the Cypriot Finance Minister Harris Georgiades about the completion of the third evaluation of Cyprus’ economic adjustment programme and the state of Cyprus’ economy, while at the end of the Eurogroup meeting they issued a written statement on Cyprus.
In the statement the Eurogroup welcomed the Troika`s conclusion following its third review mission that Cyprus` adjustment programme is on track.
«We commend the authorities` continued prudence in budgetary execution which, together with a less severe recession than anticipated, has contributed to meeting fiscal targets for 2013 with a considerable margin», the statement said.
However the Eurogroup pointed out that “the outlook remains challenging and maintaining fiscal discipline remains necessary” and that “at the same time, efforts to create the conditions for sustainable growth need to be intensified”.
“ We note with satisfaction the signs of improvement in macro-financial stability as programme implementation has progressed”, its added and welcomed “the steps already taken to enter the second stage of the gradual relaxation of restrictions on payment flows signified by the relaxation of restrictions on fixed term deposits, in line with the government`s milestonebased roadmap”.
It also noted that efforts will need to continue to effectively implement the planned reforms in the financial sector, including in arrears management and the structural measures agreed in the Memorandum of Understanding.
“With the adoption of the umbrella law for budgetary processes and of the privatisation law, Cyprus has also complied with the prior actions agreed under this review”, the statement said.
The Eurogroup has therefore endorses in principle the disbursement of the next tranche of financial assistance to Cyprus, it added.
It noted that “subject to national procedures and formal approval by the ESM governing bodies, the ESM is scheduled to disburse EUR 150 million by the beginning of April. Concurrently, the IMF Executive Board is expected to decide on the disbursement of EUR 86 million.”
With the adoption by the Parliament last Tuesday of a bill on the privatization of semi-governmental organisations (SGO’s), Cyprus’ international lenders decided that all the prerequisites have been fulfilled and on the part of the Eurogroup there were no more outstanding issues.
In late March 2013, the Cypriot authorities agreed with the European Commission, the European Central Bank and the IMF, collectively known as the Troika, on a €10 billion bailout. One of the bailout’s preconditions was the implementation of a privatisation plan covering the Cyprus Telecommunications Authority (Cyta), the Cyprus Ports Authority, and the EAC by 2018, to generate €1.4 billion in order to restore public debt sustainability.
