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Post-Programme Surveillance for Cyprus

The Economic Adjustment Programme for Cyprus was formally agreed in May 2013. In March 2016, Cyprus exited its three-year Economic Adjustment Programme which included the implementation of an ambitious reform agenda and contributed to ensuring financial stability, improving public finances and restoring sustainable economic growth.

Cyprus is now subject to post-programme surveillance (PPS) until at least 75% of the financial assistance received has been repaid. Thus, barring any early repayments, PPS may last at least until 2029.The objective of PPS is ultimately to measure Cyprus's capacity to repay its outstanding loans to the ESM.

Under PPS, the Commission, in liaison with the European Central Bank, will (i) conduct regular review missions in Cyprus to assess its economic, fiscal and financial situation; and (ii) prepare semi-annual assessments of Cyprus's economic, fiscal and financial situation and determine whether corrective measures are needed.

Economic Adjustment Programme for Cyprus

Following a request by Cyprus on 25 June 2012, the European Commission (EC), the European Central Bank (ECB) and the International Monetary Fund (IMF) agreed an Economic Adjustment Programme with the Cypriot authorities on 2 April 2013. The Programme was agreed by the euro area Member States on 24 April 2013 and by the IMF Board on 15 May 2013. It covered the period 2013-2016. The financial package covered up to EUR 10 billion with the ESM providing up to EUR 9 billion, and the International Monetary Fund (IMF) contributing around EUR 1 billion.

Objectives:

The economic adjustment programme addressed short- and medium-term financial, fiscal and structural challenges facing Cyprus. The key programme objectives were:

  • to restore the soundness of the Cypriot banking sector and rebuild depositors' and market confidence by thoroughly restructuring and downsizing financial institutions, strengthening supervision and addressing expected capital shortfalls, in line with the political agreement of the Eurogroup of 25 March 2013;
  • to continue the on-going process of fiscal consolidation in order to correct the excessive general government deficit as soon as possible, in particular through measures to reduce current primary expenditure, and maintain fiscal consolidation in the medium-term, in particular through measures to increase the efficiency of public spending within a medium-term budgetary framework, enhance revenue collection and improve the functioning of the public sector;
  • to implement structural reforms to support competitiveness and sustainable and balanced growth, allowing for the unwinding of macroeconomic imbalances, in particular by reforming the wage indexation system and removing obstacles to the smooth functioning of services markets.

ESM disbursements

Support Group for Cyprus

By mobilising EU funds and technical expertise, the Support Group for Cyprus (SGCY) supported the Cypriot authorities’ efforts to restore financial, economic and social stability and to implement the Memorandum of Understanding (MoU) on Specific Economic Policy Conditionality. As of 1 July 2015, the SGCY, together with the Task Force for Greece (TFGR), became part of the newly created Structural Reform Support Service (SRSS). This new service, housed in the Commission’s Secretariat-General, is specialised in providing technical assistance in implementing growth-enhancing administrative and structural reforms to all Member States requesting it. The SRSS is headed by Director-General Maarten Verwey.

Programme reports

News articles and press releases

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