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Cyprus fulfilled programme conditions: IMF source

The IMF is interested in having a long-term sustainable economy after a possible solution

The International Monetary Fund, part of the troika of international lenders, considers that the prior actions demanded by Cyprus’ adjustment programme have been fulfilled, the Cyprus News Agency (CNA) said.

To get the money from the European Stability Mechanism, the eurozone bailout fund, Nicosia had to amend laws on foreclosures and forced sales of mortgaged property in line with a deal with its international lenders.

Quoting an unnamed IMF source, CNA said on Friday that the organisation’s governing board will convene in December to conclude the fifth review.

“We consider the prior action met at this stage, on the basis of the developments of the past few days,” the source said.

The IMF will contribute €86 million.

The IMF’s decision follows that of the Eurogroup, which on Thursday approved the disbursal of €350 million, the European Commission and the European Central Bank’s contribution.

However, the IMF echoed the other two bodies in warning that cash will be released on condition that parties would not seek to limit the scope of the foreclosures law.

Approval of the tranche was delayed by around a month after opposition parties insisted on passing legislation limiting the scope of the law.

Their bills were thrown out by the Supreme Court but parties are again seeking to legislate, claiming they were trying to protect people’s primary residences.

The government, in co-operation with all parties bar AKEL, which chose to sit on the fence,  is trying to prepare the so-called insolvency framework that will contain safeguards for vulnerable groups hit by the recession.

“If there is no further legislative action, I think we could go towards a completion of the review and I would expect a Board meeting on this towards the middle of December,” the IMF source said.

Disbursement of the tranche will be completed in three to four weeks.

The same source said that the next Troika mission will visit Cyprus in January but no specific dates have been set yet.

The source noted that the insolvency framework is “the focus of the program at this stage.”

The plan is to enact the framework before the end of this year so that it will be in force when a suspension of repossessions of primary residencies expires on January 1, 2015.

AKEL has submitted a bill to suspend the foreclosures law until the end of June, 2015, while EDEK and the Green party want the law suspended until the insolvency framework kicks in.

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