2013年-IMF国际货币组织全球_Cyprus_Request_for_an_Arrangement_Under_the_Extended_Fund_Facility_129页_2mb

Cyprus: Request for Arrangement Under the Extended Fund Facility (IMF Staff Report Summary)

Core Content Overview

This document outlines Cyprus' request for a three-year Extended Fund Facility (EFF) arrangement with the International Monetary Fund (IMF), aimed at addressing the country's severe financial and economic imbalances. The program is designed to restore financial stability, achieve sustainable public finances, and support long-term economic growth.

Key Information

• IMF Arrangement: A 3-year EFF arrangement of SDR 891 million (563% of quota, approximately €1 billion) was requested, with the first disbursement of SDR 74.25 million (about €86 million) upon Board approval. The European Stability Mechanism (ESM) is expected to contribute around €9 billion over 2013-2016.
• Economic Context: Cyprus faced significant internal and external imbalances prior to the global financial crisis. These were exacerbated by an oversized and weak banking sector (assets over 800% of GDP), heavily exposed to Greece, leading to large contingent liabilities for the sovereign.
• Banking Crisis: The Greek debt restructuring and loan losses in Cyprus and Greece led to the insolvency of the two largest banks. This triggered a loss of confidence and a banking crisis, necessitating bold measures to resolve the sector.
• Program Objectives: The program focuses on two main goals: restoring financial sector stability and achieving sustainable public finances.

Main Elements of the Program

Financial Sector Policies

• Restoration of Stability: The program aims to restore financial stability and credit flows to support economic activity.
• Bank Restructuring: The resolution and restructuring of the two insolvent banks (Bank of Cyprus and Cyprus Popular Bank) were completed through measures including the sale of Greek branches, asset transfers, and recapitalization with participation of creditors.
• Supervision and Regulation: Reform of bank and cooperative supervision, debt restructuring, and strengthening of anti-money laundering (AML) frameworks are key components.
• Capital Controls: Temporary administrative measures were introduced to manage liquidity and prevent capital flight. These included restrictions on cash withdrawals, checks, wire transfers, and account openings.

Fiscal Policy

• Fiscal Adjustment: An ambitious fiscal adjustment is required to balance short-term cyclical concerns and long-term sustainability. A long-run primary fiscal surplus of 4% of GDP is targeted to bring public debt close to 100% of GDP by 2020.
• Current Fiscal Efforts: The fiscal deficit was reduced to 5.6% of GDP in 2012 from 6.3% in 2011. The government financed itself through short-term paper, a Russian loan, and central bank liquidity support.
• Structural Reforms: Reforms to budget frameworks, revenue administration, and pensions will complement fiscal adjustment. Privatization efforts will help reduce financing needs.

Structural Fiscal Reforms

• Privatization: A privatization program is part of the strategy to reduce the need for further financing.
• Pension Reforms: Early retirements and pension reform measures have increased public pension outlays, necessitating fiscal adjustments.
• Public Wage Indexation: Reforms to the public wage indexation mechanism are also included to enhance fiscal sustainability and competitiveness.

Risks and Challenges

• Macroeconomic Risks: The program faces high macroeconomic risks due to the uncertain impact of the banking crisis and fiscal consolidation on economic activity.
• Financial Sector Risks: Lingering concerns about the reliance of the largest bank on central bank support, rising non-performing loans (NPLs), and the potential consequences of lifting administrative restrictions are significant.
• Political Risks: The political resolve to implement all aspects of the program could falter, increasing the risk of higher debt levels and the need for additional financing.
• Program Design: The design of the program includes additional financing buffers and equally-phased Fund disbursements to mitigate risks for the IMF.

Program Modality and Implementation

• Access and Phasing: The arrangement will be phased over three years, with disbursements contingent on quarterly reviews.
• Conditionality: The program is subject to conditionality, with monitoring by the IMF, European Commission (EC), and European Central Bank (ECB).
• Legal and Policy Framework: The program is supported by the Memorandum of Economic and Financial Policies (MEFP), Technical Memorandum of Understanding (TMU), and the Letter of Intent (LoI).

Market Reactions and Spillovers

• Limited Spillovers: Despite the crisis, spillovers to other euro area markets were limited in magnitude, with the strongest impact on Greek government bonds and bank stocks.
• Temporary Measures: The market response was largely temporary, and most markets stabilized after the initial sell-off. However, the risk of long-term spillovers cannot be dismissed.
• Capital Controls: Temporary administrative measures were introduced to safeguard financial stability, including restrictions on cash withdrawals, checks, wire transfers, and new account openings.

Economic Forecast

• Short-Term Contractions: Real GDP is expected to contract by 8.7% in 2013 and 3.9% in 2014, driven by the banking crisis, fiscal consolidation, and administrative restrictions.
• Gradual Recovery: A modest recovery is anticipated starting in 2015, with growth stabilizing at 1.8% by 2020, significantly lower than the 4% average over the past 30 years.
• Fiscal Impact: Fiscal consolidation is expected to have a strong negative impact on economic activity, with fiscal multipliers being larger during recessions.

Conclusion

The program is designed to support Cyprus through a period of deep recession and financial restructuring. It combines financial sector stabilization, fiscal adjustment, and structural reforms to ensure long-term economic sustainability and market access. The implementation of the program requires strong political commitment and careful monitoring to mitigate risks and ensure success.