Troika team arrives, 350m tranche by December
A new team of technocrats from the Troika of international lenders arrived on Monday to prepare the ground for the next review of the island’s economic adjustment programme some time in early January.
Already, the Eurogroup of Eurozone finance ministers has approved the next tranche of 350 mln euros in bailout money that had been delayed with the parliament’s decision to challenge the set of bills on mortgage foreclosures.
The delay, that concluded with the Supreme Court saying the parliament’s interjection had been unlawful, brought the Cyprus government closer to bankruptcy as the foreclosures bills, aimed to improve debt collection by the banks, was a conditional ‘prior action’ to secure the next package of the 10 bln bailout money.
The IMF Executive Board is also expected to approve its contribution of about 85 mln euros, thus raising the funds, expected to arrive on the island in early December, to 435 mln euros.
Now that the foreclosures fracas is out of the way, the Troika will focus on other reforms and restructuring issues, such as the creation of a national health system (NHS) that should begin implementation in mid-2015 to improve merging of services in the public sector, better use of services from the private sector, lowering the cost of medicines and making healthcare more accessible to the vulnerable groups of society.
Other issues on the agenda are progress on the privatisation of government assets and services, a review of the financial sector by the Central Bank in order to lift all remaining obstacles on capital movement, while keeping a watchful eye on other issues that could derail the adjustment programme, that would ultimately freeze the bailout plan.
Finally, with the bank stress tests suggesting that the four systemic banks on the island – Bank of Cyprus, Hellenic, Cooperative, RCB – have enough capital with withstand further shocks without government assistance, the Ministry of Finance may consider resorting to international markets for funding yet again.