The European Stability Mechanism (ESM) will begin its assessment of Cyprus’ intention to repay the remainder of its 2013 bailout to the International Monetary Fund of over €700m, its Managing Director Klaus Regling said.
In its 2020 budget Cyprus has included provisions to repay the remainder of the loan it secured from the IMF during the 2013 banking crisis when it received a bailout funded by the ESM and the Fund. The early repayment is to be financed by cheaper lending obtained from financial markets.
Under financial assistance modalities, the ESM should issue a waiver. The ESM remains Cyprus’ largest individual creditor with an outstanding debt of €6.3 billion.
“Portugal or Greece requires the ESM to waive its own early repayment rights. And that, in turn, requires an assessment on our side, which we are happy to start. I am sure the process will go smoothly as our collaboration with Cyprus has always been excellent,” Regling told the Economist Conference.
On the Cypriot economy, Regling said the ESM’s overall our conclusion is that Cyprus faces no major risks in meeting its loan service payments.
“Cyprus’ growth is expected to remain robust, with moderate risks in the medium-term. Consumption and investment are expected to provide positive contributions to growth.”
But he pointed out that Cyprus is a small, open economy and therefore exposed to external risks, adding that external risks such as Brexit, protectionism and high exposure to financial market volatility may affect the country’s growth.
Source: Financial Mirror