By Peter OBIORA InvestAdvocate

Lagos (INVESTADVOCATE)- Christine Lagarde, Managing Director  (MD) of the International Monetary Fund (IMF) Monday commended Cyprus on steps taken to ensure financial stability of the country and approved the disbursement of about  ÃƒÂ¢Ã¢â‚¬Å¡Ã‚¬84.7 million, or US$113.1 million extended fund facility (EFF).

This is coming on the heels of the IMF first review of Cyprus’s performance under an economic program arrangement.

“The Cypriot authorities have made commendable progress in implementing near-term stabilization policies. They remain committed to taking further steps to restore financial stability and the sustainability of public finances to support long-run growth,” she said.

Lagarde said important policy actions were taken to advance the banking sector strategy, including the recapitalization of the two (2) largest banks in Cyprus without the use of public support, and the exit from resolution of the merged institution.

According to the IMF MD, adequate short-run liquidity support by the Eurosystem remains critical to restoring confidence while a strong business and funding model is being put in place to ensure the bank’s long-run viability.

“Steps are being taken to recapitalize and restructure remaining solvent banks and the cooperative credit sector. The authorities will also strengthen the supervision and regulation of these institutions, and ensure the full implementation of the anti-money laundering framework by banks. Improvements to the private debt restructuring framework aim to facilitate corporate and household deleveraging and maximize asset recoveries,” she said.

Lagarde affirmed that Cyprus payment restrictions that were earlier introduced to safeguard financial stability will be eased gradually to boost confidence and support economic activity.

She advised Cyprus authorities on the need to implement carefully the measures included in their recently published roadmap, based on achieving specific milestones in the banking sector strategy, while maintaining sufficient flexibility in the event of unanticipated developments.

“Cyprus is on track to meet its 2013 fiscal targets, thanks to the significant consolidation underway and prudent budget execution. Given still high macroeconomic uncertainty, continued fiscal prudence is called for,” she affirmed.

With the disbursement of the €84.7 million, or US$113.1 million, it brings to a total of disbursements under the arrangement to about €169.4 million, or US$226.2 million.

The IMF said EFF arrangement, approved on May 15, 2013 is part of a combined financing package with the European Stability Mechanism (ESM) amounting to €10 billion.

According to the Fund, it’s intended to stabilize the country’s financial system, achieve fiscal sustainability, and support the recovery of economic activity to preserve the welfare of the population.