Next bailout pay­ment of € 500 mln in Oc­to­ber, € 125 mln from IMF

Financial Mirror (Cyprus) - - FRONT PAGE -

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.

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