STAFF LEVEL AGREEMENT REACHED ON CYPRUS’ PROGRAM, SAYS TROIKA

The Troika (EC, ECB, IMF) has issued a statement announcing that staff-level agreement has been reached on policies that could serve as a basis for completion of the reviews of Cyprus` economic reform program.

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The fact that insolvency and foreclosure frameworks are in place, it says, has allowed for the finalisation of the staff-level agreement. The institutions note however that further actions will be important to support the reduction of non performing loans, including legislation to facilitate the sale of bank loans.

The Troika also calls on the Cypriot authorities to “maintain the structural reform momentum:”. The reform of the public sector administration is key in this respect, it points out.

“Timely implementation of the privatization plan is necessary to increase economic efficiency, attract investment, and reduce public debt” it stresses.

“Following the recent visit to Nicosia by teams from the International Monetary Fund (IMF) and the European Commission (EC), in liaison with the European Central Bank (ECB), to review Cyprus`s economic reform program, staff-level agreement has been reached on policies that could serve as a basis for completion of the reviews”, the statement reads.

It continues noting that “Cyprus’s economic reform program, which is supported by financial assistance from the European Stability Mechanism (ESM) and the IMF, aims to foster economic recovery and job creation by restoring financial sector stability, strengthening public finances, and implementing reforms to increase long-run growth.”

A key policy reform of the program, it says, “has been the adoption of modernized insolvency and foreclosure frameworks, which are needed to reduce the high level of non-performing loans, an essential step to restoring growth and job creation in Cyprus.”

“The main elements of these frameworks are now in place, which has allowed for the finalization of the staff-level agreement”, the statement continues.

The staff teams “look forward to the effective implementation of these frameworks, and will help the authorities in adjusting and strengthening them as needed, based on experience over the coming months and international best practices.”

It also points out that “further actions will be important to support the reduction of NPLs, including legislation to facilitate the sale of bank loans.”

“The authorities should maintain the structural reform momentum”, the Troika statement says, adding that “the reform of the public sector administration is key in this respect.”

“Timely implementation of the privatization plan is necessary to increase economic efficiency, attract investment, and reduce public debt”, it points out.

Conclusion of the reviews is subject to the approval process of both the EU and the IMF, which will be initiated shortly, the statement reads.

CNA sources say that the IMF`s Executive Board is expected to approve the report and disbursement of the next tranche on June 16.


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