The International Monetary Fund approved a three-year, $1.3 billion loan on Wednesday to support Cyprus’ attempts to stabilise its financial sector, bring the Government’s deficit under control and restore economic growth.

The loan to Cyprus from the Washington-based crisis lender is part of a rescue package of 10 billion euros ($ 12.9 billion) forged in March with the eurozone’s bailout fund.

The IMF’s executive board approved the Cyprus loan, including an immediate disbursement of $ 110.7 million. With the IMF disbursement, Cyprus has received about $ 2.7 billion this week from its international lenders.

The eurozone bailout fund, the Luxembourg-based European Stability Mechanism, announced on Monday that it had approved its first bailout tranche for Cyprus and transferred an initial 2 billion euros ($ 2.6 billion). The rest of the tranche — up to 1 billion euros — will be transferred by June 30.

Klaus Regling, chief of the European Stability Mechanism, said on Monday, “The loans granted by the ESM help to maintain financial stability in the euro area and buy time for Cyprus. This time enables Cyprus to undertake the reforms necessary to rebuild its economy on a sustainable basis.” In the eurozone’s long-running fiscal crisis, Cyprus followed Greece, Ireland and Portugal to became the fourth eurozone country since 2010 to agree to a full bailout.

Earlier yesterday, the European Union’s statistics office issued an initial estimate that the 17-member bloc remained in recession for a sixth straight quarter, with the region’s economy contracting 0.2 per cent in the January-March. The gross domestic product results were worse than financial industry expectations.

Cyprus saw its economy shrink by 1.3 per cent in the first quarter.

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