articles | 15 January 2016

Eurogroup praises Cyprus’ progress

The Eurogroup recently praised Cyprus for its progress in implementing its bailout programme, but noted that the country still had a few remaining obligations toward its international lenders.

“Cyprus is doing particularly well and has implemented the programme with lots of ownership,” Eurogroup President Jeroen Dijsselbloem said during a pressconference after the meeting of eurozone finance ministers in Brussels.

“We are approaching the end of the programme for Cyprus. There are three issues which the Cypriot government is working on.

“The programme ends at the end of March, and therefore next month we will come back to the three open issues to see where we are there.”

For his part, Pierre Moscovici, the European Commissioner for Economic and Financial Affairs, noted that the last three prior actions or reforms to be carried out by Cyprus were of major significance.

Klaus Regling, Managing Director of the European Stability Mechanism (ESM), said that upon completion of the eighth review of its economic adjustment programme, Cyprus stood to draw €275m from the ESM and another €125m from the International Monetary Fund (IMF).

“We are working on the scenario that the three prior actions will be completed,” Regling said.

The fact, he added, that Cyprus has drawn only €6.6bn of the €9bn allocated to the programme was indicative of the state of the economy and that Cyprus is “a success story.”

The government says it is not in dire need of any bailout tranches. The Cyprus News Agency (CNA) cited Public Debt Management Office figures showing that only €730m comes due in 2016, of which €170m is an EMTN (foreign Eurobond).

In an interview with the CNA earlier in the day, Finance Minister Harris Georgiades said that as the prior actions are not yet in place, his ministry is lobbying for one evaluation and one last disbursement amounting to €125 million from the IMF executive board, in that it is not certain that parliament will approve the last prior action in time to secure the green light from the eurozone Finance Ministers by March.

Nicosia has complied with the three out of the four prior actions, namely the approval of the unbundling of the Electricity Authority of Cyprus, the approval of the law regulating loan sales to third parties, and the approval of the law for the future employment conditions in Cyprus’ Telecommunications Authority (Cyta) in the context of a privatisation process.

However parliament has yet to approve the bill for the creation of a new telecoms company, paving the way for the privatisation of Cyta.

Referring to the two bond issuances in 2015, Georgiades told the CNA: “We are planning to have only one issuance (in 2016), perhaps by the end of the year, with the prospect of exchanging bonds that mature around 2020, as we did last year.”

But money from the bailout programme was not the issue.

“This is matter of credibility and a positive sign for the conclusion of our efforts as well as a sign for our intention to press on with the necessary reforms,” Georgiades said.

Source: Cyprus Mail

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