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Cyprus

IMF’s Velculescu likens Cyprus to Icarus

By Angelos Anastasiou
The Executive Board of the International Monetary Fund (IMF) on Monday discussed the 2014 Article IV Consultation with Cyprus, it announced on Tuesday.
Part of a process of annual check-ups of all member states, the consultation takes place less frequently for recipients of IMF aid.
“[The Article IV Consultation] looks at a country’s economy broadly and provides policy recommendations going forward,” an IMF spokesperson said. “In the case of countries with financial assistance, this consultation takes place on a less frequent basis (Cyprus’ last Article IV Consultation took place in 2011).”
The full report is scheduled to be issued on Wednesday.
According to the Cyprus News Agency, three texts would be released. The first is expected to cover basics and the conclusions of the visit. The second is said to focus on technical issues, and the third, the position of the representative of the IMF mission.
CNA said that according to sources the report will focus more on the risks that exist and what should be done rather than on what has been achieved since the inception of the Cyprus programme.
It goes back to the period before the crisis and how it was created and makes references to policies taken after the programme’s implementation.
During Monday’s discussion the issue of non-performing loans was on the table, and how they should be tackled to get the programme back on track.
The troika is not expected back in Cyprus for its sixth review – probably in 2015 – until the issues surrounding foreclosures legislation is resolved.
However, a small technical team will visit Cyprus around November 10 to review pending or other matters related to prior actions.
The 6th programme tranche was not disbursed in September 2014 (€433m) due to non-compliance in introducing legislation on foreclosures.
Former IMF mission chief for Cyprus Delia Velculescu, during Monday’s discussions, likened Cyprus to Icarus, the mythological figure who flew too close to the sun, burnt his wings, fell in the sea and drowned, sources told CNA.
Cyprus’ Dutch representative to the board Menno Snel reportedly replied that contrary to Icarus Cyprus had managed to float.
He also likened Icarus’ father, Daedalus, to the IMF, noting that in Icarus’ case he did not heed his father’s advice, while in Cyprus’ case, the IMF did not do as much as it should to avert the crisis.
Velculescu is being replaced by American Mark Lewis who will be in Nicosia on November 4, for a conference organised by The Economist.

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