IMF will contribute billion euros to Cyprus bailout

Lagarde said she expected the IMF board to approve the funds in early May.

“A staff team of the International Monetary Fund has reached staff level agreement with the Cypriot authorities on an economic programme that will be supported by the IMF jointly with the European Union and the European Central Bank,” she said.

“A combined financing package of 10 billion euros is designed to help Cyprus cover its financing needs, including to service debt obligations, while it implements the policies needed to restore the health of the economy and regain access to capital market financing.”

Meanwhile, the Cyprus crisis could tip Greece into an even deeper recession this year, the head of Greece’s biggest business group said yesterday, urging a growth-boosting rethink of the country’s bailout programme.

“Greece is directly affected by the Cyprus crisis and based on some estimates this may chop up to one percentage point off GDP (gross domestic product),” Dimitris Daskalopoulos, head of the Hellenic Federation of Enterprises (SEB), said.

Greece’s economy is in its sixth straight year of decline as Athens applies austerity policies to shore up public finances and keep bailout aid flowing, with unemployment above 26 per cent, the highest rate in the 17-nation eurozone.

The government projects a 4.5 percent slump this year, bringing total economic contraction in 2008-2013 to almost a quarter – Greece’s deepest recession in peacetime history.