27.3.2014

EN

Official Journal of the European Union

L 91/40

(1)

Regulation (EU) No 472/2013 applies to Member States already in receipt of financial assistance, including those from the European Stability Mechanism (ESM), at the time of its entry into force.

(2)

Regulation (EU) No 472/2013 sets the rules for the approval of macroeconomic adjustment programme for Member States in receipt of financial assistance, which rules need to be consistent with the provisions of the Treaty Establishing the ESM.

(3)

Upon a request of 25 June 2012 by Cyprus for financial assistance from the ESM, the Council decided on 25 April 2013 by Decision 2013/236/EU (2) that Cyprus was to rigorously implement a macroeconomic adjustment programme.

(4)

On 24 April 2013 the ESM Board of Governors decided to grant, in principle, stability support to Cyprus and approved the Memorandum of Understanding on Specific Economic Policy Conditionality (hereinafter referred to as the ‘楳oU‘� and its signing by the Commission on behalf of the ESM.

(5)

In accordance with Article 1(2) of Implementing Decision 2013/463/EU (3), the Commission, in liaison with the European Central Bank (ECB), and, where appropriate, with the International Monetary Fund (IMF), has conducted the third review to assess the progress with the implementation of the agreed measures as well as their effectiveness and economic and social impact.

(6)

As a result, Implementing Decision 2013/463/EU should be updated in the areas of financial sector reform, fiscal policy and structural reforms, in particular with regard to (i) the design of a communication strategy by a joint Central Bank of Cyprus (CBC) and Ministry of Finance task force on the roadmap for the relaxation of the capital controls and on the implementation of the banking sector strategy; (ii) the timely reporting of banks‘�estimates of the potential impact of the newly introduced and upcoming Union rules on capital requirements and non-performing loans (NPLs) on capital, profitability and coverage ratio; (iii) the establishment of a task force to assess the magnitude of registered but untitled land sales contracts, and to provide recommendations on this issue; (iv) the reform of corporate and personal insolvency procedures; (v) the review of the Civil Procedure Code and Court Rules to ensure a smooth and effective functioning of the revised foreclosure and insolvency frameworks; (vi) a revision of the primary deficit target for 2014 to 1,8 % of GDP; (vii) the implementation of a first stage of the National Health System (NHS), having first defined and adopted a full roadmap to NHS; (viii) the revision of policies on pricing and reimbursement of medical goods and services, including those related to pharmaceutical expenditure; (ix) the establishment of a Privatisation Unit; (x) the presentation of an action plan for addressing the shortcoming identified in Phase 2 of the peer review by the Organisation for Economic Cooperation and Development (OECD) Global Forum on Transparency and Exchange of Information for Tax Purposes; (xi) the development of a growth strategy based on Cyprus‘�competitive advantages to help the Cypriot authorities to kick-starting the economy. The implementation of comprehensive and ambitious reforms in financial, fiscal and structural areas should safeguard the medium-term sustainability of the Cypriot public debt.

(7)

Throughout the implementation of Cyprus‘�comprehensive policy package, the Commission should provide additional policy advice and technical assistance in specific areas. A Member State subject to a macroeconomic adjustment programme experiencing insufficient administrative capacity is to seek technical assistance from the Commission, which may constitute, for that purpose, groups of experts.

(8)

The Cypriot authorities should seek the view, in accordance with current national rules and practices, of social partners and civil society organisations in the preparation, implementation, monitoring and evaluation of the macroeconomic adjustment programme,

(1)

Paragraph 5 is replaced by the following:

‘�. With a view to restoring the soundness of its financial sector, Cyprus shall continue to implement the restructuring of the banking and cooperative credit institution sectors; continue to strengthen the supervision and regulation; undertake a reform of the debt restructuring framework; and gradually lift capital restrictions in line with its roadmap, while safeguarding financial stability. The programme shall provide for the following measures and outcomes:

(2)

Paragraph 7 is replaced by the following:

‘�. During 2014, the Cypriot authorities shall fully implement the permanent measures included in the 2014 Budget Law which shall amount to at least EUR 270 million. They shall also ensure the full implementation of the consolidation measures adopted since December 2012.‘�/p>

(3)

The following paragraph is inserted:

‘�a. For the fiscal policy in 2015-16, the Cypriot authorities shall pursue a general government balance in line with the adjustment path respecting the excessive deficit procedure (EDP) recommendation.‘�/p>

(4)

Paragraph 8 is amended as follows:

(5)

Paragraphs 10 to 13 are replaced by the following:

‘�0. Cyprus shall ensure the implementation of the agreed measures to address the identified shortcomings in its activation policies. Cyprus shall take swift action to create opportunities for young people and improve their employability prospects, in line with the objectives of the Council Recommendation on establishing a Youth Guarantee (4). The design, management and implementation of the measures targeted to youth shall be well integrated within the broader system of activation policies and be coherent with the reform of the social welfare system and the agreed budgetary targets.

11. Cyprus shall stand ready to adopt any further necessary amendments to sector-specific legislation required in order to fully implement Directive 2006/123/EC of the European Parliament and of the Council (5). The Cypriot authorities shall further improve the functioning of the regulated professions. The competition framework shall be improved by enhancing the functioning of the competent competition authority and by reinforcing the independence and powers of the National Regulatory Authorities.

12. Cyprus shall ensure a reduction in the title deed issuance backlog, take action to accelerate the swift clearing of encumbrances on title deeds to be transferred to purchases of immovable property, and define deadlines for the issuance of building certificates and title deeds.

13. Cyprus shall amend the rules on the forced sale of mortgaged property and shall allow for private auctions within the shortest feasible timespan. The pace of court case handling shall be improved and court backlogs shall be eliminated by the end of the programme. Cyprus shall take initiatives to strengthen the competitiveness of its tourism sector, by implementing the concrete action plan leading to the attainment of the quantified targets identified, inter alia, in the revised Tourism Strategy for 2011-15. Cyprus shall implement an aero-political strategy leading to the adaptation of Cyprus‘�external aviation policy, taking into account the EU external aviation and the EU aviation agreements, while ensuring sufficient air connectivity.

(6)

In paragraph 14, point (b) is replaced by the following:

(7)

Paragraph 15 is replaced by the following:

‘�5. Cyprus shall submit an updated request to the Commission for technical assistance during the programme period. The request shall identify and specify the areas of technical assistance or advisory services which the Cypriot authorities consider essential for the implementation of its macroeconomic adjustment programme.‘�

(8)

The following paragraph is added:

‘�6. When developing a comprehensive and coherent growth strategy that would allow the kick-starting of the economy, Cyprus shall integrate it into its national institutional framework leveraging on the on-going public administration, public financial management reform, other commitments in Cyprus‘�macroeconomic adjustment programme and relevant Union initiatives taking into account the Partnership agreement for the implementation of the European Structural and Investments Funds.‘�