WASHINGTON - The International Monetary Fund released the next installment of its bailout of Cyprus on Friday, launching the latest stage in its support plan for the desperately struggling eurozone economy.
The IMF said 83.5 million euros ($114 million) was newly available to Cyprus, bringing to 250 million euros the amount it has disbursed from the three-year, billion-euro loan extended to Cyprus.
IMF financing is part of a 10-billion-euro bailout package for Cyprus, put together with support from the European Union.
The Washington-based global lender said the loan payment followed the IMF executive board’s second review of Cyprus’s performance under a loan-supported economic program.
In return for the bailout, Cyprus agreed to a raft of painful reforms, including a massive downsizing of its banking sector.
IMF managing director Christine Lagarde said Cypriot authorities had “a record of strong policy implementation” and had made “considerable progress” in stabilizing the financial sector. “While macroeconomic outcomes have been somewhat better than expected, the economic situation and outlook remain difficult and subject to significant risks,” Lagarde said in a statement.
“Full and timely implementation of the adjustment program, as well as broad public support, is therefore crucial to restore confidence and growth.”
The Mediterranean country’s 2014 budget is “appropriately conservative, given the uncertain outlook,” she said.
The “troika” of international lenders—the IMF, the European Commission and the European Central Bank—forecasts that Cyprus’s gross domestic product will contract 7.7 per cent in 2013.