2013年-IMF国际货币组织全球_Cyprus_First_Review_Under_the_Extended_Arrangement_Under_the_Extended_Fund_Facility_and_Request_for_Modification_of_Performance_Criteria_121页_1mb

Summary of the IMF Staff Report on Cyprus: First Review Under the Extended Fund Facility and Request for Modification of Performance Criteria

Core Content

This document outlines the first review under the Extended Fund Facility (EFF) for Cyprus, conducted by the International Monetary Fund (IMF) in the context of the country's economic crisis. It includes the staff report, a press release, and statements from the Executive Director, summarizing the economic developments, policy discussions, and the progress made in meeting the program's performance criteria.

Main Points

1. Background and Context

• Political and social tensions following the March crisis are slowly subsiding.
• The resolution of the two largest systemic banks through the bail-in of uninsured depositors was controversial, weakening the support of the newly elected government.
• The Central Bank of Cyprus (CBC) faced criticism and internal conflicts, resulting in the resignation of its Board of Directors, but a new board has since been appointed.
• The government has publicly supported the program, and public acceptance is gradually increasing.

2. Recent Economic Developments

• The recession has deepened, with GDP declining by 5.2 percent y-o-y in the second quarter of 2013.
• Unemployment has risen sharply to 17.3 percent in June, the highest y-o-y change in the Eurozone.
• The trade deficit has decreased slightly, but the current account deficit has increased by 1.3 percent of GDP y-o-y.
• Fiscal performance through June 2013 was better than expected, with a fiscal deficit of 1.3 percent of GDP and a primary surplus exceeding targets.
• Revenue outperformed projections due to higher income taxes and more resilient tax collections, while spending was kept prudent.

3. Government Financing and Debt Exchange

• A €1 billion domestic debt exchange and the rollover of the Laiki recapitalization bond were completed, helping to meet the end-June structural benchmark.
• The debt exchange involved replacing bonds maturing between 2013–16 with new bonds having extended maturities through 2019–23.
• The transaction was anticipated, resulting in limited market reaction, and was completed on July 1.

4. Capital Controls and Deposit Restrictions

• Deposit restrictions and capital controls were gradually eased to protect economic activity.
• These measures were introduced in late March to prevent destabilizing deposit outflows.
• Key relaxations include lifting the cap on non-cash business transactions, delegating documentation checks to banks, and exempting international customers of foreign banks.
• About 10 percent of uninsured deposits in BoC were unfrozen in early April.

5. Financial Sector Challenges

• Banks' asset quality has deteriorated, with non-performing loans (NPLs) reaching nearly 30 percent of total loans.
• Provisioning for loan losses is only 30 percent of total loans, below the European average, indicating potential future profitability issues.
• Credit to the economy continues to contract, with corporate credit down by 9 percent y-o-y in June.

6. Program Strategy and Policy Focus

• The program strategy remains centered on restoring financial sector stability and public finance sustainability to support long-term growth.
• Immediate focus is on ensuring BoC exits resolution and receives appropriate liquidity support.
• Over the medium term, the strategy will need to be refined to ensure long-term funding for BoC.
• Fiscal consolidation is ambitious but well-paced, with an emphasis on protecting vulnerable groups amid rising unemployment.

7. Macroeconomic Outlook and Risks

• The macroeconomic outlook remains unchanged, projecting a contraction of 9 and 4 percent in 2013 and 2014, respectively.
• The contraction is driven by domestic demand and supply-side issues, particularly in financial services and construction.
• Tourism and professional services show some resilience, while administrative and education activities are declining.
• Unemployment is expected to rise to 17 and 19.5 percent in 2013 and 2014, respectively, before gradually declining.
• Inflation is projected to remain at 1 percent (headline) and 0.4 percent (core), consistent with data trends.
• The current account deficit is expected to reach 2 and 0.6 percent of GDP in 2013 and 2014, respectively, and stabilize at around 2 percent of GDP in the long run.

8. Debt Sustainability

• Public sector debt is projected to peak at 126 percent of GDP in 2015 and decline to 105 percent by 2020.
• The debt-to-GDP ratio remains highly vulnerable to shocks, especially if nominal GDP growth is lower than expected.
• Contingent liabilities from the banking sector, including ELA and insured deposits, pose significant risks.
• External debt is expected to remain elevated, reaching 440 percent of GDP in mid-2013, and decline to 345 percent by 2020.
• External debt sustainability depends on continued external adjustment and economic recovery, and is vulnerable to interest rate shocks.

Key Information

• Performance Criteria: All end-June performance criteria were met with a comfortable margin.
• Debt Exchange: The €1 billion debt exchange and rollover of the Laiki recapitalization bond were completed, contributing to meeting the structural benchmark.
• Capital Controls: Restrictions were gradually eased, with some exemptions for international customers of foreign banks.
• Fiscal Performance: The fiscal deficit was 1.3 percent of GDP in June 2013, with a primary surplus exceeding targets.
• Unemployment: Unemployment rose to 17.3 percent in June, the highest y-o-y change in the Eurozone.
• NPLs: Non-performing loans reached nearly 30 percent of total loans, with provisioning at only 30 percent.
• Sectoral Impact: Construction and financial services are expected to contract, while tourism and professional services show some resilience.
• Debt Risks: Public and external debt remain high and vulnerable to shocks, especially if economic recovery is delayed or if nominal GDP growth is lower than anticipated.

Conclusion

The IMF staff report highlights that while Cyprus has made progress in meeting the program's performance criteria, significant challenges remain in restoring confidence, managing debt sustainability, and ensuring financial sector stability. The country's economic outlook is cautious, with continued contraction expected in the short term and a reliance on structural reforms and fiscal discipline to support long-term recovery.