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Cyprus gets next IMF aid installment

Staff writer |
The International Monetary Fund (IMF) signed off on Cyprus' progress in meeting the conditions of its bailout program, giving the euro zone country another $114 million.

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Cyprus has to comply with the conditions of the bailout program to get each installment of the bailout fund over the course of three years.

Cyprus came to the brink of bankruptcy last March, when it faced a cash crunch from years of fiscal slippage and a banking system deeply exposed to losses in Greece. As part of a 10 billion euro aid package from the IMF and the European Union, Cyprus was forced to shut down one of its largest banks and have bank deposits in a second bank seized to recapitalize it.

To get the bailout funds, the government promised to cut spending and privatize the state telecoms, electricity and ports authorities.

IMF Managing Director Christine Lagarde said Cyprus has done a good job of sticking with the program of reforms, stabilizing its financial sector and meeting budget-cutting targets. But she called on the government to speed up the privatization process.

"While macroeconomic outcomes have been somewhat better than expected, the economic situation and outlook remain difficult and subject to significant risks. Full and timely implementation of the adjustment program, as well as broad public support, is therefore crucial to restore confidence and growth," said Ms. Lagarde.

The IMF's board said it had also approved Cyprus's request to modify some performance criteria for the end of December, without specifying further, according to the IMF statement.

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