Staff teams from the European Commission (EC), European Central Bank (ECB), and the International Monetary Fund (IMF) visited Nicosia during July 17-31 for the first quarterly review of Cyprus’s economic program, which is supported by financial assistance from the European Stability Mechanism (ESM) and the IMF. The program’s objectives are to restore financial sector stability, strengthen public finance stability, and adopt structural reforms so as to support long-run growth, while protecting the welfare of the population.

The overall assessment is that Cyprus’ 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. Yet the short-term economic outlook remains difficult and subject to considerable uncertainty.