ESM financial assistance for Cyprus

On 25 June 2012 the Cypriot Government submitted a request for stability support to the President of the Eurogroup. Following a period of extensive negotiations, the key elements for a macroeconomic adjustment programme were agreed by the Eurogroup on 25 March 2013. The programme addresses Cyprus’s financial sector imbalances including an appropriate downsizing of the country’s financial sector, fiscal consolidation, structural reforms and privatisation.

The agreement on the macroeconomic adjustment programme opened the way for members of the euro area to decide on a package of financial assistance for Cyprus of up to €10 billion. The ESM will make available €8.968 billion, and the International Monetary Fund (IMF) is expected to contribute around €1 billion.

In its Statement of 25 March, the Eurogroup stated that financial assistance to Cyprus is in principle warranted to safeguard financial stability in Cyprus and the euro area as a whole. Based on this assessment, on 24 April 2013 the ESM Board of Governors decided to grant, in principle, stability support to Cyprus. On 8 May 2013 the ESM Board of Directors approved the financial assistance facility agreement (FFA). According to the terms of the FFA, the first tranche of financial assistance was provided to Cyprus in two separate disbursements. The first disbursement of €2 billion was transferred on 13 May 2013, and the second disbursement of €1 billion was transferred on 26 June 2013. The second tranche of assistance, in the form of €1.5 bn of ESM floating rate notes, was disbursed on 27 September 2013. The Cypriot government will use the notes for the recapitalisation of the cooperative banking sector.

The financial assistance facility is designed to cover Cyprus’s financing needs after the inclusion of proceeds from burden-sharing measures adopted by the Cypriot government.  These needs include budgetary financing, the redemption of medium and long-term debt, and the recapitalisation of financial institutions except the country’s two largest banks (Bank of Cyprus and Cyprus Popular Bank, which were subject to restructuring and resolution measures by the Cypriot government).

The Memorandum of Understanding (MoU) prepared by the European Commission, in liaison with the ECB, as well as the IMF, and approved by the Board of Governors on 24 April 2013, specifies the conditions to be met for the first and subsequent disbursements of ESM financial assistance, which include measures related to revenue, public expenditure, as well as pension and health care reform.

Disbursements of ESM financial assistance to Cyprus (max. total committed: €8.968 billion; availability period ends on 31 March 2016)

Date of disbursement Amount disbursed Type of disbursment Final maturity Cumulative amount disbursed
13/05/2013 €2 bn Cash 13/05/2027  €2 bn
26/06/2013 €1 bn Cash 26/06/2028 €3 bn
27/09/2013 €1.5 bn



€4.5 bn
19/12/2013 €100 mn Cash 19/12/2029 €4.6 bn
04/04/2014 €150 mn Cash 04/04/2030 €4.75 bn
09/07/2014 €600 mn Cash 09/07/2031 €5.35 bn
15/12/2014 €350 mn Cash 15/12/2025 €5.7 bn
15/07/2015 €100 mn Cash 15/12/2031 €5.8 bn
08/10/2015 €200 mn Cash


€6.3 bn
€300 mn Cash


Weighted average maturity of loans: 14.9 years

Details of the ESM floating rate notes provided to Cyprus 1

 ISIN  Issuance date  Maturity   Type     Amount  
EU000A1U98Y4 27/09/2013 27/03/2015 18-month FRN €1.5 bn

1 Notes provided by the ESM are redeemed at maturity and rolled over into cash loans

© European Stability Mechanism 2015

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