The European Stability Mechanism (ESM) will begin its assessment over Cyprus intention to repay the remainder of its loan to the International Monetary Fund amounting to over €700 million, the ESM Managing Director Klaus Regling has said.
In its budget for 2020 Cyprus said it intends to repay the remainder of the loan it secured from the IMF during the 2013 when it received a bailout funded by the ESM and the Fund. The early repayment will be financed by cheaper lending obtained by the financial markets.
Under financial assistance modalities, the ESM should issue a waiver. The ESM remains Cyprus’ largest individual creditor with an outstanding debt of €6.3 billion.
“Portugal or Greece, requires the ESM to waive its own early repayment rights. And that, in turn, requires an assessment on our side, which we are happy to start. I am sure the process will go smoothly as our collaboration with Cyprus has always been excellent,” Regling told the 15th Economist Conference on Tuesday.
On the Cypriot economy, Regling said the ESM’s overall, our conclusion is that Cyprus faces no major risks in meeting its loan service payments.
“Cyprus` growth is expected to remain robust, with moderate risks in the medium-term. Consumption and investment are expected to provide positive contributions to growth,” he said.
But he pointed out that Cyprus is a small, open economy and therefore exposed to external risks, adding that external risks such as Brexit, protectionism and high exposure to financial market volatility may affect the country’s growth.