|
|
A combined financing package of €10 billion (about US$13 billion) is designed to help Cyprus cover its financing needs, including to service debt obligations, while it implements the policies needed to restore the health of the economy and regain access to capital market financing.
The IMF’s contribution would be through a three-year SDR891 million (about €1 billion; or US$1.34 billion) loan, representing about 563 per cent of Cyprus’ quota, under the Extended Fund Facility (EFF). Ms Lagarde expects that the arrangement would go to the Executive Board for approval in early May.
The Cypriot authorities have put forward an ambitious, multi-year reform programme to address the economic challenges they face. The programme builds on resolute policy steps taken recently. First, problems in the two largest banks are being addressed upfront with an approach that avoids putting additional burden on taxpayers and contributes to putting public debt on a sustainable path.
Second, substantial fiscal consolidation measures for 2013-15 have been introduced with this year’s budget, implying limited need for additional fiscal measures in the short term.
Third, the government implemented a significant reform of the public wage indexation mechanism as well as important steps to improve the pension system’s long-term viability.
The programme ahead rests on two pillars. The first pillar aims to restore the health of the financial system and minimise the contingent liabilities from the banks to the state.
The second pillar entails an ambitious and well-paced fiscal adjustment that balances short-run cyclical concerns and long-run sustainability objectives, while protecting vulnerable groups.
See also Statement by the Republic of Cyprus government spokesman Mr Christos Stylianides, 2.4.13 © Mondo Visione
Press conference by the Republic of Cyprus Government spokesman and ministers participating in the Government's negotating team with the Troika, 2.4.13 © Mondo Visione