19June2014

EurogroupstatementonCyprus

The Eurogroupwelcomes the Troika's conclusion following its fourth reviewmission thatCyprus'sadjustmentprogrammeremainsontrack.Wearepleasedwiththecontinuationofthe good fiscal performance recorded so far under the programme. We call on theauthorities to lend furthermomentum to the implementationof the fiscalstructural andstructuralreformagenda,inordertoimproveeconomicgrowthprospects,whilerenderingtheprotectionofvulnerablegroupsmoreequitable.Wealsowelcomethefurtheradvancesmadeinstabilisingthefinancialsector,includingtheprogress in restructuring the cooperative credit institutions and the finalisation of theirrecapitalisation. Effectively reducing the stock of nonperforming loans remains a keychallenge. This is essential to allow for a resumption of credit to the private sector tosupportgrowthandjobcreation.TheEurogroupconsidersthatCyprus'spositivetrackrecordintheexecutionofthemacrofinancialprogrammehasplayedan importantrole inenhancingconfidenceandpermittingthesuccessfulreturntothefinancialmarketsaswellastheabolitionofcapitalcontrolsontransactionswithintheRepublic.Thepaceatwhichtheremainingrestrictionsonexternaltransactions are relaxed in accordancewith the government's roadmapwill continue todependonsolidprogrammeperformance.In viewof the above, the Eurogroup endorsed inprinciple thedisbursementof thenexttranche of financial assistance to Cyprus. Subject to national procedures and formalapprovalbytheESMgoverningbodies,theESMisscheduledtodisburseEUR600millioninthefirsthalfofJuly.The IMFExecutiveBoard isexpectedtoconsiderthedisbursementofEUR86millionaroundthesametime.