World Economy

IMF Holds Back Cyprus Rescue Cash

IMF Holds Back Cyprus Rescue CashIMF Holds Back Cyprus Rescue Cash

The International Monetary Fund held back $106 million (86 million euro) in bailout funds for Cyprus Friday, after the eurozone government suspended a foreclosure law that was required under the loan program.

Cyprus needed an international bailout of $12 billion (10 billion euro) from the European Commission and the International Monetary Fund in early 2013, largely due to problems in its banking sector.

“Following today’s suspension of the existing legislation on foreclosure, critical requirements for the completion of the fifth program review are now no longer met,” the IMF said in a statement. Its board had been set to discuss Cyprus’ progress with the loan program on Friday and was likely to release the next installment of aid, Reuters reported.

The eurozone released its latest tranche of bailout loans to Cyprus in November after Nicosia amended laws on foreclosures and on forced sales of mortgaged property in line with the conditions of the loan.

“We look forward to continued cooperation, and will agree with the authorities on next steps in the period ahead,” the IMF said in the statement. Greek Finance Minister Harris Georgiades called the suspension “unnecessary and inexcusable,” adding that it undermined Cyprus’ credibility. “It simply sends the message that we haven’t overcome a mindset and attitudes that have so dearly cost us in the past.”

Government officials have said Cyprus’ steadfast adherence to the terms of its rescue program is mainly responsible for the country consistently beating dour projections regarding its post-bailout economic performance.

The economy is projected to grow 0.4 percent next year, which would bring an end to a three-year recession that has been shallower than expected.

This is the second time that Cyprus has run into trouble with its creditors over the foreclosures law. In September, Cyprus’ eurozone partners refused to release a bailout installment after parliament passed additional legislation weakening the law. The hurdle was overcome after lawmakers backtracked and amended some of the legislation while the Supreme Court struck down other pieces as unconstitutional.