Brussels, 10/12/2013 (Agence Europe) - On Monday 9 December, the Eurogroup gave the go-ahead for the disbursement of €100 million of aid for Cyprus from the European Stability Mechanism (ESM). The International Monetary Fund is expected to endorse the payment of €86 million on 20 December. Meanwhile, eurozone finance minsters have issued a statement, praising Cyprus and making recommendations for implementation of the structural adjustment programme.
The Eurogroup endorsed the recent conclusions reached by the troika of lenders (European Commission, European Central Bank and IMF): “We were glad to hear that all prior actions have been completed, and that there is a firm commitment to strengthen the government's privatisation strategy, which was one of the last outstanding issues. We underline that a full and timely policy implementation remains essential to address the many challenges that the Cypriot economy is facing.”
Asked about potential friction between the Cypriot government and central bank, Euro Commissioner Olli Rehn said that the Treaty underlines independence of central bank. “That's why we're closely monitoring this matter in Cyprus”, he said.
On Monday morning, Cypriot Finance Minister Harris Georgiades said that a well-functioning central bank was crucial, pointing out shortcomings listed in a report on bank supervision. He said there were open questions, but they had nothing to do with the differences between the government and the central bank. The minister pointed out the negative economic aspects for the island, such as a “broken” credit line and pressure on liquidity. In connection with this is the emergency liquidity aid (ELA) from the ECB, contracted by the now dissolved bank Laiki, which was wound up and the ELA transferred to Bank of Cyprus without the assets that would normally serve as a guarantee. In June, Cypriot President Nicos Anastasiades wrote to the troika asking for a solution to the programme. Georgiades said that this pressure on liquidity has already eased, and the government was determined to implement what has been agreed to. He said that if necessary, the question would be raised with troika partners at the right time. He said that the government was not planning any further tax increases. (EL/transl.fl)