Statement on Cyprus after the Eurogroup
meeting
yesterday, in Brussels
The Eurogroup supports the Cypriot Government’s decision
to exit its macroeconomic adjustment programme without a successor arrangement.
The Eurogroup commends the Cypriot Authorities for the overall successful
implementation of the programme and the important achievements made in the past
three years, and also thanks the institutions for their vital contribution
towards this end.
The Eurogroup welcomes the fact that economic activity
has continued on a positive trend, and the banking system has further healed.
The commitment of the Authorities and the Cypriot people to the overall
programme agreements has also been essential to a fiscal performance that has
exceeded expectations. These positive developments have been instrumental in
regaining investor confidence in the Cypriot economy, with the sovereign
returning to the international markets.
The Cypriot banking system in particular has undergone a
deep transformation. The ground covered since March 2013 has been significant
and the reform measures, which have been executed or are underway are essential
to restoring the Cypriot financial system to viability. However, work must
continue with determination to secure the reduction of the non-performing loan
ratio to healthier levels. This includes the rigorous and swift implementation
of the insolvency framework and foreclosure laws adopted in 2015 together with
further measures, including the legislation on sale of assets and effective use
of the full range of the available non-performing loan management tools.
At the same time, the Eurogroup notes that the last
prior action under the current review has not yet been completed. The
privatisation of the Cypriot Telecommunications Authority would be another
growth-enhancing step. Along with public administration reform and other
structural reforms discussed during the programme, this would cement the
improvements in public finance and support sustained economic growth.
In total, about 30% of the EUR 9 bn programme envelope
remains unutilised. We note that the IMF programme is expected to come to an end
today, 7 March.
Against this background, the Eurogroup welcomes the
reaffirmed commitment by the Cypriot Authorities to sustain public finances
consolidation and the reform momentum over the medium term, in order to address
the remaining vulnerabilities. The Eurogroup will continue supporting the reform
process in Cyprus, inter alia, in the context of post-programme surveillance and
of the regular EU and euro-area specific monitoring frameworks.
______________
8/3/2016
