Brussels, 08/10/2015 (Agence Europe) - On Thursday 8 October, the European Stability Mechanism (ESM) announced via its Twitter account that it had made the payment of a tranche of €500 million to Cyprus, bringing the total amount of financial assistance disbursed to date to €6.3 billion. For its part, the IMF has paid out €718 million so far.
The seventh monitoring report of the Commission and the ECB explains that the financial requirements between the second quarter of 2013 - when the assistance plan began - and the second quarter of 2015 have proven far less than anticipated. This is due to more favourable budgetary developments than forecast. The report also notes that the yields on Cypriot treasury bonds have remained at reasonably low levels, despite the “headwinds” from prevailing uncertainty in Greece.
For the final quarter of the year, the financial needs have been put at €1.1 billion: €900 million of debt repayments and €200 million of budgetary needs.
This means that there is still €2.7 billion in the ESM programme, which is to run until the first half of 2016. It seems unlikely that the full amount will end up being used. However, the director-general of the ESM, Klaus Regling, declined to take position on the issue, at a press conference on Monday 5 October (see EUROPE 11404).
These positive budgetary developments and the fact that the banks do not appear to have any further recapitalisation requirements at this stage are having positive impacts on the debt, which the Commission notes started to decline this year from 105% of GDP down to 79% by 2020. The risks for the debt trajectory are related to the budgetary and macroeconomic performance of the island, and the performance of the privatisation programme. The report flags up delays in the field of privatisations and states that a firm commitment of the Cypriot authorities on this point would appear necessary to ensure that they remain on track. (Original version in French by Elodie Lamer)