The Eurogroup welcomes the request of the Cypriot authorities for financial assistance from euro area Member States in view of the challenges that Cyprus is facing, in particular due to distress in the banking sector and the presence of macro-economic imbalances. The Eurogroup acknowledges that an adjustment programme seems warranted at this stage and considers responding favourably to it. The Eurogroup also welcomes the request of Cyprus for financial assistance from the IMF, which in turn would be considered in line with its internal procedures. Ministers invite the Commission, in liaison with the ECB, and the Cypriot authorities and the IMF, to agree on a programme, including the financing needs, and take appropriate action to safeguard financial stability, in light of the current very challenging external environment and spill-over effects from sovereign market turbulence.
Based on a needs assessment, the euro area financial support would be provided in the framework of a comprehensive adjustment programme, building on the measures already taken by the Cypriot authorities and the recommendations put forward by the European Commission on 30 May under the European Semester. The programme will be negotiated by the Commission, in liaison with the ECB, with the Cypriot authorities and the IMF. After an agreement has been reached with the Cypriot authorities, the programme would be endorsed by the Eurogroup, in line with national procedures, on the basis of an assessment by the Commission, in liaison with the ECB, and the IMF, of the financing needs and the conditionality that shall accompany the assistance.
The Eurogroup is confident that the implementation of this programme would address the financial, fiscal and structural challenges of the economy in a decisive manner and should allow Cyprus to return to a sustainable growth path.
The programme will be based on:
-
ambitious measures to ensure the stability of the financial sector by addressing expected capital shortfalls and preserving the soundness of financial institutions, including restructuring and downsizing where needed;
-
determined action to carry out the fiscal adjustment to support the ongoing process of fiscal consolidation;
-
structural reforms to support competitiveness and sustainable and balanced growth, allowing for the unwinding of macro-economic imbalances.
The financial assistance package shall be provided by the
EFSF or the
ESM on the basis of its financing instruments. The Eurogroup looks forward to a swift response from the
IMF to the Cypriot request after having completed its required internal procedures.
In a separate statement on 25 June, Jean-Claude Juncker, President of the Eurogroup, said he welcomed the formal application for financial assistance he had received from the Cypriot authorities.
"The Eurogroup will now swiftly examine the request and will provide a formal response to Cyprus. The Eurogroup is also expected to give a mandate to the Commission, in liaison with the ECB, to negotiate the necessary policy conditionality, which shall accompany the financial assistance. This will include measures that will address the main challenges of the Cyprus' economy, primarily those of the financial sector and I expect that Cyprus will engage with strong determination in the required policy actions."
Press release
© European Council
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article