articles | 27 June 2013

EU releases another one billion euros in bailout funds

The European Stability Mechanism (ESM) on Wednesday gave Cyprus €1.0 billion, completing the first tranche of the island’s financial assistance programme.

The first part of the tranche – €2.0 billion – was transferred on May 13. Both disbursements were made in cash and cover fiscal needs and the roll-over of maturing debt. The cash is part of a €10 billion international bailout granted to Cyprus in April. The first two instalments mature in 2027 and 2028 respectively.

The financial assistance facility is designed to cover Cyprus’s financing needs after the inclusion of proceeds from burden-sharing measures adopted by the Cypriot government. These needs include budgetary financing, the redemption of medium and long-term debt, and the recapitalisation of financial institutions except the country’s two largest banks, Bank of Cyprus and Laiki Bank, which were subject to restructuring and resolution measures by the Cypriotgovernment.

The Memorandum of Understanding prepared by the European Commission, in liaison with the ECB, as well as the IMF specifies the conditions to be met for the first and subsequent disbursements of ESM financial assistance, which include measures related to revenue, public expenditure, as well as pension and health care reform.

Source: Cyprus Mail

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