Next bailout payment of € 500 mln in October, € 125 mln from IMF
The Eurogroup welcomed the positive seventh review of the Cyprus economic adjustment programme in July that now paves the way for the approval procedures in a number of member states, after which the ESM board of governors will formally approve the disbursement of EUR 500 mln in October.
Eurogroup President Jeroen Dijsselbloem, Commissioner Pierre Moscovici and Head of ESM Klaus Regling expressed warm words on the progress achieved by the Cypriot economy.
In its statement on Cyprus, the Eurogroup said that the fiscal developments continue to exceed expectations, the financial situation of the banks is showing signs of gradual improvement and some progress has been noted on i mportant growth-enhancing reforms.
The Eurogroup noted that it was encouraged that the economic recovery in Cyprus is gaining strength, the labour market is showing signs of stabilisation, although unemployment remains high, and that the economy showed overall resilience in the past months.
It said that addressing the excessive level of non-performing loans remains a top priority for Cyprus in order to reignite credit growth and ensure that banks continue to improve their resilience.
“In this regard, we stress the importance of an effective implementation of the recently enacted insolvency legislation and of the enhanced foreclosure framework, together with other measures adopted recently to speed up the reduction of arrears. The determined pursuit of financial sector reforms, including legislation to facilitate the sale of loans, remains necessary to secure a decisive reversal of the non-performing loan trend.
“The Eurogroup commends the Cypriot authorities for the progress that has been made to date, and calls on them to keep up the reform momentum. The timely implementation of the growth-enhancing reform agenda, including privatisation and public administration reform, is essential in order to restore Cyprus’ growth potential, while safeguarding the protection of the most vulnerable groups”, it added. The statement said that the Eurogroup agrees to endorse in principle the updated Memorandum of Understanding, as well as the disbursement of the next tranche of financial assistance to Cyprus.
“We consider that the necessary elements are now in place to launch the relevant national procedures, paving the way to the formal approval by the ESM governing bodies of a disbursement of EUR 500 mln in October. Concurrently, the IMF Executive Board is expected to decide on the disbursement of about EUR 125 mln”, it concluded.