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11.03.2014 - 16: 08

Eurogroup approved a new tranche of credit assistance to Cyprus

Eurogroup on Monday decided to grant Cyprus's fourth tranche of credit assistance in the amount of € 150 million

Funds will be transferred to the Cypriot authorities in early April after the approval of the Board of Governors of this step of the European Stability Mechanism. At the same time anti-crisis aid to Cyprus in the amount € 86 million to allocate and the International Monetary Fund (IMF).

The green light for the provision of a new tranche was given at a meeting of the finance ministers of the euro area in Brussels. They were informed by the "troika" of international creditors (the European Union, the European Central Bank and the IMF) about the results of the next month's regular verification of the implementation of the financial stabilization program by the Cypriot authorities. The agreement on its terms was reached in March 2013. The "Troika" then agreed to provide Cyprus with financial assistance of € 10 billion in exchange for carrying out a program of austerity measures and structural reforms, primarily in the banking sector. They included a "haircut" of uninsured deposits in the Bank of Cyprus and the Cyprus National Bank, as well as the unification of these financial institutions with the subsequent termination of the latter.

During inspections lenders focused on the course of bank restructuring and privatization program of state enterprises. While carrying through Parliament a law on denationalization process they set as a condition for a new tranche. The Government of Cyprus has fulfilled this point in the program, with difficulty achieving approval of the bill on February 4 deputies background held mass protests and strikes the largest SOEs.

In its statement, the Eurogroup paid tribute to the government of Cyprus for "continuing to implement a reasonable budget, which, along with a less deep than expected, recession allowed to achieve the set budget targets for 2013 year with a significant margin." "We are pleased to note signs of strengthening macrofinance stability as the program is being implemented," the statement said. "We also welcome the steps already taken to move to the second phase of the gradual easing of restrictive measures on payment flows, which was marked by the removal of restrictions on time deposits."

Nevertheless, the Eurogroup warned that the Cyprus economy continues to face serious challenges. In this regard, "must continue to maintain fiscal discipline and at the same time to make additional efforts to create conditions for sustainable growth," the statement said.

A source:

Tags: Cyprus, European Union, Economy, Credit, Help, Banks