The International Monetary Fund on Thursday said it would likely disburse its first bailout loan to Cyprus after next week's board meeting. The IMF executive board is expected to discuss the bailout program for Cyprus on Wednesday, Fund spokesman Gerry Rice said at a regularly scheduled news conference.
If the board approves the disbursement, it was expected to be made "shortly after the board meeting," he said. Following prolonged negotiations, the so-called troika of international lenders - the IMF, the European Commission and the European Central Bank - agreed in late March to lend 10 billion euros ($13.1 billion) to Cyprus. In exchange, the nearly bankrupt eurozone country has agreed to a series of emergency measures, including tax hikes and privatizations, and a drastic overhaul of its ailing financial sector.
Cyprus is also set to raise 400 million euros from the sale of gold reserves and a roll-over of debt held by Cypriot investors, including a 2.5 billion euro loan extended by Russia in 2011. The unprecedented "haircut" on deposits forced the government to close all the island's banks for nearly two weeks in March and impose Draconian controls when they reopened to prevent a run on accounts.
The IMF has pledged to contribute up to one billion euros ($1.3 billion) as part of the three-year international bailout of Greece, its fourth eurozone bailout after Greece, Ireland and Portugal. The Cypriot parliament narrowly approved the controversial IMF-EU bailout deal on April 30. According to the troika's projections, the Cypriot economy is expected to contract 8.7 percent this year and 3.9 percent in 2014.