The Executive Board of the International Monetary Fund (IMF) yesterday completed the eighth review of Cyprus’s economic adjustment program supported approving the disbursement of about €126 million), which brings total disbursements under the program to SDR 693 million (about €882 million).
Completion of the ninth review would be expected to take place before the end of the year, the fund said.
Since March 2013, when Cyprus concluded on the €10 billion bailout with the EU and the IMF, Cyprus received approximately €7 billion.
IMF Deputy Managing Direcror Mitsuhiro Furusawa said in a statement “Cyprus’s reform program remains a success. Economic activity in the first half of the year has been better than expected, and fiscal outturns are running ahead of projections.”
He added that liquidity in the core banking system has continued to improve, and the prospects for resolving non-performing loans are improving, pointing out that going forward, it will be important to continue with sound macroeconomic management and maintain the reform momentum.
Furusawa underlined that “a significant improvement in addressing non-performing loans remains an urgent priority to preserve financial stability and boost growth.”
“Further efforts are needed to strengthen banking supervision and regulation. It is important that financial institutions continue their efforts to restructure loans. In light of continued uncertainties in the region, the financial status of Greek-owned subsidiaries will continue to warrant close attention, he noted.
Describing Cyprus fiscal performance as impressive, Furusawa pointed out that “high public debt together with sizeable contingent liabilities warrant continued prudence while ensuring support for growth-enhancing public spending and the safety net. Reform efforts should focus on advancing public administration, improving the management of government guarantees, and strengthening revenue administration.”
Concluding, Furusawa called on the Cypriot authorities to “press ahead on other key structural reforms to support growth,” namely to overcome the delays on the privatization program, and to improve the business environment.”