Lenders conclude Cyprus's 7th program review

Cyprus's international lenders concluded their seventh review of the eastern Mediterranean island's bailout program on Friday, revising upwards their projections of economic growth for the country.

Finance Minister Harris Georgiades said after a meeting with the heads of the troika mission that their projection for this year's Gross Domestic Product was revised to 0.5 percent, up from a 0.5 per cent contraction projected in the spring.

"This is an indication that the implementation of the program ... is bearing fruit. At the same time, it refutes the impression that the implementation of the program leads to a deeper recession," said Georgiades.

His remarks were aimed at critics who had castigated him for what they said was a lack of support on his behalf for Greece's effort to do away with its bailout memorandum in the messy run-up to the latest agreement on a third financial assistance program.

Georgiades had insisted on the application of an austerity program when Greece's ex-finance minister Yanis Varoufakis insisted on prematurely ending the country's second bailout program.

Cyprus entered a 10-billion-euro assistance program in March 2013, that also included a radical restructuring of its banking system and the world first bail-in.

But unlike Greece, which failed to apply its two previous adjustment programs, Cyprus stuck to the end by its commitments, leading its tattered economy to recovery within less than 30 months.

The projected expansion of the economy by 0.5 per cent will be a reversal in more than four years of economic contraction.

Georgiades said that the troika technocrats, representing the European Commission, the European Central Bank and the International Monetary Fund, have established that the state of public finances was good and no additional measures were required to be taken.

"But there will be no relaxation. Prudent fiscal policy will continue as fiscal consolidation and the return to economic growth is perhaps the most important success of the Cypriot program," said Georgiades.

But international lenders set three prior actions before a 500 million tranche in loan money is released in September.

The Cypriot government has to introduce legislation leading to the gradual privatization of the state-owned telecommunications company (CYTA) and a bill on the reform of the public administration.

Parliament is also required to approve legislation permitting issuing title deeds to home purchasers who are exposed to bank indebted land developers and a second bill to safeguard the rights of borrowers against possible excesses in the procedure of loan sales.

The completion of the troika review coincided with a statement by an IMF spokesman in Washington who said "Cyprus is a success story".

He said the expected return of Cyprus to growth shows that measures implemented are beginning to pay off.
  Xinhua - china.org.cn
25/7/15
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