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Economic Adjustment Programme for Cyprus

The Economic Adjustment Programme for Cyprus was formally agreed in May 2013.

The Programme aims to address the financial, fiscal and structural challenges facing the economy in a decisive manner and should allow Cyprus to return to a sustainable growth path.

Latest status

Staff teams from the International Monetary Fund (IMF) and the European Commission (EC),  in liaison with the European Central bank (ECB), visited Nicosia during July 14-24 2015 to review Cyprus’s economic reform programme.

The teams have reached staff-level agreement on policies that could serve as a basis for completion of the review, reflecting the progress and policies under the program. The financial situation of the banks is gradually improving, and there is tentative evidence that the slow pace of debt restructuring is picking up. The fiscal targets in the first half of 2015 were met with substantial margins. In addition, the authorities are making progress on their structural reform agenda.

The latest disbarment by the European Stabilisation Mechanism (ESM) took place on 15/07/2015 and amounted to €100 mn.

Facts and figures on the 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 covers the period 2013-2016. The financial package will cover up to EUR 10 billion; the ESM will provide up to EUR 9 billion, and the International Monetary Fund (IMF) is expected to contribute around EUR 1 billion.

Objectives:

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

  • 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.

Financing:

Financial assistance of EUR 10bn has been granted to the Republic of Cyprus, of which EUR 9bn to be provided by the ESM and EUR 1bn by the IMF.

ESM loan disbursements

Overview of ESM loan disbursements to Cyprus

Date of disbursement

Amount

Maturity

Remaining amount of ESM Financial assistance available

15/07/2015€100mn15/12/2031

€3.20bn

15/12/2014

€350mn

15/12/2025

€3.30bn

09/07/2014€600mn09/07/2031

€3.65bn

04/04/2014€150mn04/04/2030

€4.25bn

19/12/2013€100mn19/12/2029

€4.40bn

27/09/2013€1.5bn27/09/2030

€4.50bn

26/06/2013€1bn26/06/2028

€6bn

13/05/2013€2bn13/05/2027

€7bn

Remaining disbursements will be subject to quarterly reviews by the Commission in cooperation with the IMF and in liaison with the European Central Bank (ECB).

Support Group for Cyprus

By mobilising EU funds and technical expertise, the SGCY supports the Cypriot authorities’ efforts to restore financial, economic and social stability and to implement the Memorandum of Understanding on Specific Economic Policy Conditionality ("the MoU").

More information on the Support Group for Cyprus

Programme reports

News articles and press releases

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