Euro group releases first bailout installment for Cyprus

The euro group has signed off the first installment of the $13 billion financial bailout package for debt-stricken Cyprus while allocating fresh disbursements for Greece and Portugal.

At the start of a two-day meeting in Brussels yesterday, the finance ministers of the 17 EU nations using the single currency released $ 2.6 billion (2 billion euros) for Cyprus from the rescue package agreed in March and offered to provide another $ 1.3 billion (1 billion euros) before the end of June."The euro group was satisfied that Cyprus has implemented all prior actions as agreed in the memorandum of understanding with its international creditors," president of the group Jeroen Dijsselbloem said at the conclusion of the meeting.

However, there were shortcomings in the Cyprus government's compliance with the measures agreed to combat money laundering, he said.

The island nation's implementation of measures to counter money laundering will be monitored closely, Dijselbloem told a news conference.

The euro zone finance ministers also want Cyprus to "proceed with the implementation of the agreed adjustment programme in a steadfast manner," he said.

In return for the bailout package from the EU and the International Monetary Fund (IMF), Cyprus had agreed to raise $ 16.9 billion (13 billion euros), mainly to restructure the country's stricken banking sector, by charging a levy up to 60 % on all deposits above 1,00,000 euros in the Bank of Cyprus, the country's largest bank.

Also, The Laiki Bank, the second largest bank of the country, will be dissolved and its "good" assets will be folded into the
Bank of Cyprus.

The Cypriot parliament had at the end of April endorsed the bailout deal with the EU and the IMF, clearing the way for the release of the assistance.

The IMF will contribute $ 1.3 billion (1 billion euros) to the bailout package.

Meanwhile, the finance ministers also agreed to release the latest tranche of $ 9.75 billion (7.5 billion euros) from the second rescue package of $ 169 billion (130 billion euros) for Greece, which was approved by the EU and the IMF in March last year.

Greece became the first euro zone nation to receive a bailout when it was rescued from bankruptcy in May 2010 with the support of a $ 143 billion (110 billion euro) financial lifeline from the EU and the IMF."Greece has made good progress in implementing the financial and structural reforms" it had agreed, Dijsselbloem said.

The ministers also agreed to disburse the latest tranche of 2.1 billion euros from the 78-billion euro bailout package offered to Portugal by the EU and the IMF in 2011.