IMF praises fiscal progress in Cyprus

17 Sep 13
Cyprus has made ‘commendable progress’ in stabilising its public finances and is ready to receive its next tranche of bailout funds, the International Monetary Fund has said

By Vivienne Russell | 17 September 2013

Cyprus has made ‘commendable progress’ in stabilising its public finances and is ready to receive its next tranche of bailout funds, the International Monetary Fund has said.

The IMF has completed its first review of Cyprus’s economic adjustment programme. This is backed by a three-year Extended Fund Facility (EFF), worth €1bn, which was approved by the IMF in May. The aid is part of a broader €10bn financing package for Cyprus agreed by eurozone finance ministers in March.

IMF managing director Christine Lagarde said: ‘The Cypriot authorities have made commendable progress in implementing near-term stabilisation policies. They remain committed to taking further steps to restore financial stability and the sustainability of public finances to support long-run growth.’

Completion of the review allows the disbursement of a further €84.7m under the EFF, bringing total disbursements under the programme to €170m. 

Lagarde said: ‘Cyprus is on track to meet its 2013 fiscal targets, thanks to the significant consolidation underway and prudent budget execution. Given still high macroeconomic uncertainty, continued fiscal prudence is called for.

‘The authorities are embarking on an ambitious structural reform agenda. Revenue administration reform aims to protect revenues and boost the efficiency of collections, while overhauling the welfare system will help mitigate the impact of the crisis on vulnerable groups.’

Risks to the programme remained ‘substantial’ and left no room for slippage, Lagarde added. She said steadfast policy implementation was critical to its success.

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