Legarde promises Cyprus €1bn rescue package

The International Monetary Fund will contribute about €1bn as part of a rescue programme for Cyprus that aims to stabilise the nation’s banks and reduce public spending, said Christine Lagarde, the IMF managing director.

The IMF yesterday announced the staff-level agreement with Cyprus on the €10bn programme, hashed out with eurozone authorities on Mar 25. The deal calls for Cyprus to restructure its two largest banks, reduce budget deficits and adjust its wage and pension systems.

“This is a challenging programme that will require great efforts from the Cypriot population,” Ms Lagarde said in a statement. “We believe that it provides a durable and fully financed solution to the underlying problems facing Cyprus and provides a sustainable path toward a recovery.”