ECOFIN to approve Cyprus' fiscal adjustment programme

Eurogroup, the euro area Finance Ministers, meeting gave on Monday the green light to Cyprus’ fiscal adjustment programme, which will be approved during today's meeting of the EU Economic and Financial Affairs Council (ECOFIN).

Speaking after the meeting, Jean Claude Juncker, the Eurogroup Chairman, said Cyprus and Finland have taken all necessary measures within the deadlines set out by ECOFIN to achieve fiscal adjustment.

Therefore, Eurogroup proposed to the ECOFIN to approve the two countries' programmes.

Furthermore, Juncker said the European Summit scheduled for March 24-25 will decide on increasing the lending capacity of the European Financial Stability Facility (EFSF).

He added that the Euro area's Finance Ministers did not conclude to final decisions, adding that this would be done by the EU leaders' meeting in mid-March.

On March 11 the leaders of the Euro area member-states will meet with the view to preparing the final decisions to be approved by the EU Summit.

Apart from the amendments to the EFSF, the EU response to the sovereign debt crisis will also include close coordination of the economic policies of the Euro area with a view to increasing competitiveness.

On his part, EU Commissioner for Economic and Monetary Affairs Olli Rehn said the increase of the EFSF's guarantees is of crucial importance so that it could draw 440 billion euro from international markets with lower interest rate as opposed to the current 250 billion.

The package includes the extension of the repayment of Greece's 110 billion euro bailout loans. Junker said that the other option under discussion is the reduction of the interest rates for Greece and Ireland.