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