The Eurogroup welcomes the decision of the Board of Directors of the European Stability Mechanism to approve the first tranche of €3 billion of financial assistance to Cyprus, in the context of the programme whose key features were agreed between Cyprus and the euro area Member States on 25 March and of the Memorandum of Understanding signed between Cyprus and the European Commission at the end of April. The first disbursement under the first tranche for an amount of €2 billion took place today. This is an important step towards the stabilisation of the Cypriot economy reflecting our unwavering commitment to preserving the financial stability of the euro area and its Member States.
Cyprus has implemented all prior actions as agreed in the MoU preceding the decision by the ESM on the first disbursement. The Eurogroup commends the Cypriot authorities for delivering on their commitments to date and reiterates its appreciation and understanding for the efforts made by the Cypriot citizens.
The Eurogroup also welcomes the completion of the independent assessments of compliance with the anti-money laundering framework in Cyprus. The Troika institutions have reported the key findings to the Eurogroup, and recommendations to rectify deficiencies will be integrated in the AML action plan to be agreed between the Troika institutions and the Cypriot authorities at the time of the first review. The action plan will need to target areas covering implementation of customer due diligence by banks, including through adequate supervision, and the functioning of the company registry, among others. It remains essential to proceed with the implementation of the adjustment programme in a steadfast manner in order to restore financial stability in Cyprus and to lay the foundations for a sustainable path of growth.
Press release
Video of press conference
The Board of Directors of the European Stability Mechanism (ESM) approved the Financial Assistance Facility Agreement and the disbursement of the first tranche of financial assistance to the Republic of Cyprus. The first tranche is transferred in two separate disbursements: the first – of €2 billion has been transferred today, and the second – of up to €1 billion to be transferred before 30 June 2013. Both disbursements will be made in cash, and will be used for the general financing needs of the public sector (roll-over of maturing debt) and fiscal needs.
“The loans granted by the ESM help to maintain financial stability in the euro area and buy time for Cyprus”, Klaus Regling, Managing Director of the ESM said. “This time enables Cyprus to undertake the reforms necessary to rebuild its economy on a sustainable basis.”
In accordance with the decisions taken by the Eurogroup on 25 March 2013, Cyprus will receive assistance of up to €10 billion during the next three years. The ESM is expected to provide up to €9 billion and the International Monetary Fund is to contribute around €1 billion, subject to approval by its Executive Board.
Economic Dialogue (ED) with the President of the Eurogroup
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