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IMF releases 84.7 mn euros in bailout funds to Cyprus

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(Globalpost/GlobalPost)

The International Monetary Fund approved Monday the release of 84.7 million euros ($113.1 million) in bailout funds to Cyprus.

The IMF executive board approved the funds after completing the first review of Cyprus's performance under a three-year, billion-euro loan program the IMF extended in partnership with the European Union, the IMF said in a statement.

With the new disbursement, Cyprus will have received about 169.4 million euros ($226.2 million) to date under the loan approved on May 15.

The loan, known as an Extended Fund Facility arrangement, is part of a combined 10-billion-euro financing package with the European Stability Mechanism, the EU's financial emergency fund.

The IMF board also approved the Cypriot authorities' request for modification of performance criteria on September 2013 fiscal targets, the Washington-based institution said.

The country plunged into crisis in 2012 as Greece's meltdown spilled over, leaving a number of its top banks insolvent and forcing depositors to accept reductions in the value of their bank accounts.

To get the loan package, the government had to take over major banks, agree to large spending cuts and tax hikes, and the sale of some state-owned assets.

On July 31 the IMF, European Central Bank and European Commission said in a review that the restructuring program is on track.

"The authorities have taken decisive steps to stabilize the financial sector and have already been gradually relaxing deposit restrictions and capital controls," it said.

However, it added, the short-term economic outlook was poor, with output projected to contract 13 percent in 2013-14.

Economic growth is only expected to recover in 2015.

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http://www.globalpost.com/dispatch/news/afp/130917/imf-releases-847-mn-euros-bailout-funds-cyprus-1