Τhe Eurogroup endorsed in principle the disbursement of the next tranche of financial assistance to Cyprus.
In a statement on Thursday the Eurogroup welcomed the Troika`s conclusion, following its fourth review mission, that Cyprus`s adjustment programme remains on track.
“We are pleased with the continuation of the good fiscal performance recorded so far under the programme” the Eurogroup said, calling on the authorities “to lend further momentum to the implementation of the fiscal-structural and structural reform agenda, in order to improve economic growth prospects, while rendering the protection of vulnerable groups more equitable”.
The Eurogroup also welcomed “the further advances made in stabilising the financial sector, including the progress in restructuring the co-operative credit institutions and the finalisation of their recapitalisation”, noting however that “effectively reducing the stock of non-performing loans remains a key challenge. This is essential to allow for a resumption of credit to the private sector to support growth and job creation”.
“Cyprus`s positive track record in the execution of the macro-financial programme has played an important role in enhancing confidence and permitting the successful return to the financial markets as well as the abolition of capital controls on transactions within the Republic” Eurozone`s Finance Ministers said, noting that “the pace at which the remaining restrictions on external transactions are relaxed in accordance with the government`s roadmap will continue to depend on solid programme performance”.
Subject to national procedures and formal approval by the ESM governing bodies, the ESM is scheduled to disburse 600 million euro in the first half of July. The IMF Executive Board is expected to consider the disbursement of 86 million euro around the same time.
On Wednesday, Cyprus issued a €0.75 billion 5year bond, three years after it had been excluded from the international markets. The Eurozone country received a €10 billion bailout to rescue its troubled banks and to cover its financing needs. The programme will cover financing needs up to the first quarter of 2016. The 5year bond issued on Wednesday will be allocated to domestic debt that matures shortly.
