Financial assistance to Cyprus

 

SUMMARY OF:

Regulation (EU) No 472/2013 on the strengthening of economic and budgetary surveillance of Member States in the euro area experiencing or threatened with serious difficulties with respect to their financial stability

Implementing Decision 2013/463/EU approving the macroeconomic adjustment programme for Cyprus

WHAT DO THE REGULATION AND DECISION DO?

• The regulation provides the legal justification allowing the European Union (EU) to provide financial help to any countries in the euro area requiring assistance. Cyprus is one of the EU countries to have benefited from the European stability mechanism (ESM).
• The decision sets out the objectives and conditions relating to Cyprus’s macroeconomic adjustment programme.

KEY POINTS

• The economic adjustment programme for Cyprus agreed by euro area countries and the International Monetary Fund (IMF) covered the period 2013-2016. The ESM promised loans worth up to €9 billion and the IMF around €1 billion.
• The programme tackled short- and medium-term financial, fiscal and structural challenges facing the country. It aimed to:
  • restore the banking sector to a sound footing;
  • reduce the excessive government deficit as quickly as possible;
  • implement structural reforms to make the economy more competitive.
• The economic adjustment programme ended on 31 March 2016. During this time, the ESM paid out €6.3 billion and the IMF €1 billion.
• Cyprus is now subject to post-programme surveillance (PPS). This will continue until at least 75% of the loans it received from the ESM have been repaid. Barring any early repayments, the surveillance will continue to 2029.
• Under the PPS, the Commission, cooperating with the European Central Bank:
  • conducts regular reviews to assess the country’s economic, fiscal and financial situation;
  • prepares half-yearly assessments of the progress being made and determines whether any further measures are needed.

FROM WHEN DO THE REGULATION AND DECISION APPLY?

• The regulation has applied since 30 May 2013.
• The decision took effect on 17 September 2013.

BACKGROUND

• The financial and economic crisis which began in 2008 brought intense pressure on several countries in the euro area. This led EU leaders to agree in October 2010 to establish a permanent crisis mechanism to safeguard the stability of the single currency area.
• In March 2011, the leaders formally amended Article 136 of the Treaty on the Functioning of the European Union by adding a single paragraph. This created a stability fund, the European stability mechanism, whose resources could be used to help any euro area government in financial difficulty.
• On 25 June 2012, Cyprus formally requested help from its euro area partners.
• For more information, see:
  • ‘Post-Programme Surveillance for Cyprus’ on the European Commission's website.

MAIN DOCUMENTS

Regulation (EU) No 472/2013 of the European Parliament and of the Council of 21 May 2013 on the strengthening of economic and budgetary surveillance of Member States in the euro area experiencing or threatened with serious difficulties with respect to their financial stability (OJ L 140, 27.5.2013, pp. 1–10)

Council Implementing Decision 2013/463/EU of 13 September 2013 on approving the macroeconomic adjustment programme for Cyprus and repealing Decision 2013/236/EU (OJ L 250, 20.9.2013, pp. 40–44)

Successive amendments to Implementing Decision 2013/463/EU have been incorporated in the original text. This consolidated version is of documentary value only.

last update 19.01.2017