Perhaps the most pressing issues concern the banking sector, with lenders and Cypriot officials focusing on non-performing loans, the Bank of Cyprus and supervision. Liquidity and the roadmap for lifting capital controls were also on the agenda of discussions at the Central Bank. Lenders held talks with finance ministry and legal service officials on the matters of state revenue management, compliance with the new tax framework, and the next steps of merging the inland revenue department with the VAT service. The reform of the public service will also be discussed with special emphasis on payroll, performance-based employee appraisals and studies prepared by British and other experts.

Cyprus and the troika of the European Commission, European Central Bank and the International Monetary Fund agreed on March 25 to a €10bn bailout, which included imposing losses on uninsured deposits in banks as well as fiscal consolidation measures amounting to 7.2% of GDP by 2016. Cyprus has passed two previous reviews with flying colours though observers suggest it would be an uphill battle from now on as the government must implement privatisations, which are fiercely opposed by unions.

Source: Cyprus Mail