Brussels, 07/03/2016 (Agence Europe) - This Monday 7 March, the Cypriot authorities notified the IMF that they wished to leave the economic adjustment programme awarded in 2013 by the Washington-based institution and theoretically scheduled to run until 14 May of this year. On 31 March, Cyprus will also leave the bailout plan provided by the eurozone.
The European Commissioner for Economic and Financial Affairs, Pierre Moscovici, recalled the “dramatic conditions” under which the bailout plan was originally put together. An initial attempt was scuppered by the Cypriot parliament and controls on movements of capital were brought in on the island. The defaulting bank Laiki ended up being dismantled following a first attempt to save it, hitting Cypriot savers hard. The island is now back on track as regards its economic growth, Moscovici said.
The tone used by the Eurogroup on Monday evening was determinedly encouraging, towards a member state on financial life support which has succeeded, against all the odds, in outperforming the budgetary targets laid down. The island will leave the programme of the European Stability Mechanism (ESM), waiving €2.7 billion from the initial envelope of €9 billion from the eurozone bailout fund. By way of comparison, the annual wealth of the island stands in the region of €17 billion.
The Eurogroup stressed the significant distance the banking sector has come since March 2013 and adds that the work must continue “with determination to secure the reduction of the non-performing loans ratio to healthier levels”. The finance ministers of the eurozone state that a prior action of the programme - the privatisation of the telecommunications operator - has not been implemented. Such a move would have been highly favourable to growth, the Eurogroup stresses. The Cypriot authorities will probably return to this action following the general elections.
The memorandum laying down the objectives of the programme is “completed”, but the country's efforts must continue, its finance minister, Harris Georgiades, commented upon leaving the meeting. (Original version in French by Elodie Lamer)