According to the latest news from WorldWay: Nicosia, June 3 —Documents recently released by the European Commission show that Cyprus's economic adjustment is progressing smoothly. This will assist Cyprus in receiving its fifth bailout loan tranche, including €600 million from the European Stability Mechanism and €86 million from the International Monetary Fund.
The Eurogroup is expected to approve the €600 million bailout loan on June 16, with €165 million earmarked to cover budget deficits and the remainder used to repay maturing foreign debt.
Due to a severe economic crisis, the Cypriot government reached a €10 billion bailout agreement with the Eurogroup and the International Monetary Fund in March last year. Under the agreement, 47.5% of deposits exceeding €100,000 at the Bank of Cyprus, the country's largest bank, were converted into bank shares, and the second-largest bank, Laiki Bank, was forced to close.
International bailout agencies completed their fourth review of the Cyprus economic adjustment program in May, with results indicating that fiscal targets have been met successfully.
Following the outbreak of the crisis in March last year, the Cypriot government implemented capital controls on banks. As of the end of last month, all capital control measures for domestic transactions had been lifted. The only remaining measure involves a monthly limit of €5,000 per account for transfers abroad, which is expected to be lifted within the year.
The document states that while economic adjustment is progressing well, the pace of state-owned enterprise privatization and national healthcare reform needs to be accelerated.
Editor: WorldWay
