Cyprus "successfully" bid farewell to its three-year financial assistance program thanks to its better-than-expected economy performance, the European Union (EU) announced on Thursday.
"Today, the financial assistance program for Cyprus formally concludes after three years," the bloc's executive arm, the European Commission, said in a statement.
The Eurozone countries agreed to provide a 10-billion-euro (11. 4 billion U.S. dollars) bailout package to Cyprus in 2013, with the European Stability Mechanism (ESM) financing up to 9 billion euros and the International Monetary Fund around 1 billion euros. The full amount was not needed. After the ESM disbursed 6.3 billion euros, and the IMF a further 1 billion euros, the Cypriot authorities said the country would not need the remaining 2.7 billion euros.
Cyprus' approach to the program and its ahead-of-schedule completion was lauded by ESM Managing Director Klaus Regling as "the euro area's latest success story." "The country has managed to restore economic growth and repair public finances much faster than expected," Regling said.
Cyprus has adopted a series of tough austerity measures to receive the loans. Its banking sector went through thoroughly restructuring and downsizing of financial institutions. The Cypriot government cut excessive deficit, in particular by reducing current primary expenditure and increasing the efficiency of public spending. The country also implemented structural reforms to support competitiveness and sustainable and balanced growth.
"Cyprus's financial sector - which was the main source of the crisis - was restructured, recapitalized and downsized, and the legal and supervisory framework was modernized," said Regling. "The country regained the trust of investors and returned to the bond market, where it continues to finance its debt at sustainable rates," he added.
Cyprus marked the forth country, following Ireland, Spain, and Portugal to exit European bailout programs without requesting further financial assistance, leaving Greece currently the only country in the zone relying on an extended rescue plan.
"We expect Cyprus to continue to grow in the coming years," said Valdis Dombrovskis, vice president of the Commission. Cyprus had achieved an expansion of its 18-billion-euro annual economy by 1.5 percent in 2015, after about four years in recession and is projected to mark a further growth of 2.0 percent this year, according to the Commission's projections.
Cyprus was forecast to achieve a fiscal surplus of 0.5 percent next year. Its unemployment rate stood at 15.8 percent at the end of 2015 but dropped to 15.5 percent in January. However, the country was warned that "the end of the program is not the end of the reform agenda." Cyprus will have to repay its loans from 2025 to 2031. Efforts were still needed from the Cypriot side to reduce its non-performing loan ratio, continue labor market reforms and maintain fiscal discipline, said the ESM. (1 euro = 1.14 U.S. dollars)
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