ESM approves 2 bln as first tranche of Cyprus bailout

The European Stability Mechanism (ESM) approved Monday the Financial Assistance Facility Agreement and the disbursement of the first tranche of financial assistance to the Republic of Cyprus.
The first tranche is transferred in two separate disbursements: the first – of 2 bln euros was transferred Monday, and the second – up to 1 bln to be transferred before June 30.
Both disbursements are in cash and will be used for the general financing needs of the public sector (roll -over of maturing debt) and fiscal needs.
“The loans granted by the ESM help to maintain financial stability in the euro area and buy time for Cyprus”, Klaus Regling, Managing Director of the ESM said.
“This time enables Cyprus to undertake the reforms necessary to rebuild its economy on a sustainable basis,” he added.
In accordance with the decisions taken by the Eurogroup on March 25, Cyprus will receive assistance of up to 10 bln during the next three years.
The ESM is expected to provide up to 9 bln and the IMF is to contribute 1 bln.
Meanwhile, the Eurogroup has commended the Cypriot authorities for delivering on their commitments to date.
In a statement issued Monday, it is said that the Eurogroup welcomed the ESM decision to approve the first tranche of financial assistance to Cyprus.
Cyprus has implemented all prior actions as agreed in the MoU preceding the decision by the ESM on the first disbursement, the Eurogroup noted and welcomed the conclusion of the independent assessments of compliance with the anti-money laundering framework in Cyprus.
“The Troika institutions have reported the key findings to the Eurogroup, and recommendations to rectify deficiencies will be integrated in the AML action plan to be agreed between the Troika institutions and the Cypriot authorities at the time of the first review”, it is noted.
According to the statement, the action plan will need to target areas covering implementation of customer due diligence by banks, including through adequate supervision, and the functioning of the company registry, among others.