In May 2013, an Economic Adjustment Programme was agreed between the European Commission, the European Central Bank (ECB), the International Monetary Fund (IMF) and the Republic of Cyprus, aiming to address the financial, fiscal and structural challenges facing the economy and allow Cyprus to return to a sustainable growth path. It covers the period 2013 - 2016. The financial package will cover up to €10 billion, including €1 billion from the IMF. The key objectives and measures of the Programme were laid down in a Memorandum of Understanding (MoU) with the European Commission (on behalf of the European Stability Mechanism - ESM) and a Memorandum Of Economic and Financial Policies (MEFP) with the IMF.
The review of the implementation of the Programme follows a standard procedure that takes place quarterly and is applicable to the Member States which are subject to similar programs. Between the review missions, Programme Partners monitor the progress achieved through the submission of information and deliverables by the Cyprus authorities, while during the actual review missions in Cyprus, the assessment of the fiscal results and projections as well as compliance with all measures contained in the Programme is carried out via technical meetings with the competent authorities. At the end of each review mission and based on the results, an updated MoU and MEFP are concluded.
The changes relate, as a general rule, to specifying the requirements in more detail as well as to the adjustment of deadlines in line with developments.
The agreed updated MoU needs to be endorsed by the Eurogroup, and before the disbursement of each installment of the loan, all Eurogroup Member States need to give their approval for the updated Programme through their Governments or through their National Parliaments according to their governance system. In addition, the agreed updated MEFP needs to be examined by the Governing Board of IMF in order to approve the disbursement of the next installment of the loan.