The International Monetary Fund said on Wednesday that it would contribute €1 billion, or about 10%, of a bailout package for Cyprus but stipulated that the country would need to take tough measures to overhaul its beleaguered economy.
The other €9 billion, or $11.6 billion, of the bailout is to come from the other 16 euro zone countries whose approval is still required.
“This is a challenging program that will require great efforts from the Cypriot population,” said Christine Lagarde, managing director, IMF.
The commitment comes after the completion of a memorandum of understanding the fund has drafted with Cyprus and the other two international organizations involved in the bailout, the European Central Bank and the European Commission.
Though it has not yet been made public, officials say the agreement includes budget cuts, the privatization of state-owned assets and other conditions Cyprus must meet.
It was another dose of strong medicine for Cyprus, which agreed last month to restructure an outsize banking sector by forcing huge losses on bondholders and big depositors in it’s two biggest lenders.
New York Times