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Lenders start second review of bailed-out Cyprus economy

International auditors forming the so-called troika have gone back to Cyprus to get detailed information about the progress of economic reforms there. The eurozone nation needs to qualify for the next bailout tranche.

On Tuesday, representatives of the European Commission, the European Central Bank and the International Monetary Fund arrived in Nicosia to begin their second analysis of the state of the Cyprus economy, following the country's international bailout.

The troika officials held initial talks with Finance Minister Haris Georgiades and central bank governor Panicos Demetriades, with the current review scheduled to last until November 8.

Cyprus needs to pass the evaluation to receive its next tranche of bailout cash under the deal negotiated with the lenders. The country had agreed to implement far-reaching economic and administrative reforms in return for 10 billion euros ($13 billion) in international rescue funds, with 9 billion euros coming from the European Stability Mechanism (ESM) and one million euros granted by the IMF.

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Auditors were reported to be focusing on the restructuring of Cyprus' banking sector, following the winding down of its second largest lender, Laiki, and the decision to make holders of deposits of at least 100,000 euros lose 47.5 percent of their capital to help get the ailing Bank of Cyprus on its feet again.

The troika was also scheduled to look into the streamlining of the unwieldy public sector which had been identified as being a huge drain on state finances. In addition and no less important, officials were planning to ask detailed questions about how far Cyprus had come in privatizing key state-run telecommunications and electricity companies.

Nicosia was also expecting a probe into the rise of bad loans on domestic lenders' balance sheets. Nevertheless, the government announced that it was confident there would be a favorable review at the end of the day, pointing out it had achieved spending cuts of over 10 percent in the 2014 budget and with it more than demanded by auditors.

hg/mkg (AFP, dpa)

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