Amid dead­lock in Greece dis­cus­sions, the IMF re­leases fund­ing to Cyprus

The China Post - - BUSINESS -

The In­ter­na­tional Mon­e­tary Fund, dead­locked with Greece over fur­ther fi­nan­cial aid, ap­proved a new loan in­stall­ment for Cyprus on Fri­day, now the only other eu­ro­zone coun­try re­ceiv­ing its bailout sup­port.

As with Greece, the ne­go­ti­a­tions be­tween Cyprus and the so­called troika — the IMF, Euro­pean Com­mis­sion and Euro­pean Cen­tral Bank — had bogged down over the eco­nomic re­forms de­manded by the cred­i­tors in ex­change for the fi­nanc­ing.

Af­ter sev­eral months of lit­tle progress, the troika in late May said a re­view had shown Cyprus was mak­ing progress on the re­forms, and no­tably hailed the adop­tion of a con­tro­ver­sial mea- sure on home fore­clo­sures.

The IMF ex­ec­u­tive board com­pleted on Fri­day the com­bined fifth, sixth and sev­enth re­views of Cyprus’s pro­gram and ap­proved the dis­burse­ment of 278.4 mil­lion eu­ros (US$315.8 mil­lion).

That would bring the to­tal amount dis­bursed in the one bil­lion euro, three- year pro­gram be­gun in 2013 to 742.4 mil­lion eu­ros.

“Eco­nomic and fis­cal out­comes have been bet­ter than ex­pected, with growth turn­ing pos­i­tive in the first quar­ter of 2015 and public fi­nances ex­ceed­ing tar­gets. Liq­uid­ity and sol­vency in the bank­ing sys­tem have im­proved, al­low­ing the elim­i­na­tion of ex­ter­nal pay­ment re­stric­tions,” David Lip­ton, the IMF’s first deputy man­ag­ing di­rec­tor, said in a state­ment.

“Go­ing for­ward, it will be im­por­tant to main­tain the re­form mo­men­tum and strong pro­gram own­er­ship.”

Cyprus sought the in­ter­na­tional life­line to pre­vent a bank­ing col­lapse. The EU and IMF to­gether of­fered 10 bil­lion eu­ros in fi­nan­cial as­sis­tance through March 2016 in the co­or­di­nated bailout.

That is far smaller than the troika’s to­tal 240 bil­lion euro bailout pack­age for Greece.

In the first quar­ter of 2015, the Cypriot econ­omy grew for the first time in nearly four years, with of­fi­cial fig­ures show­ing a 1.6 per­cent rise in gross do­mes­tic prod­uct.

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