Regulation (EU) No 472/2013 applies to Member States already in receipt of financial assistance, including those from the European Stability Mechanism (ESM), at the time of its entry into force.

Regulation (EU) No 472/2013 sets the rules for the approval of the macroeconomic adjustment programme for Member States in receipt of financial assistance. Those rules need to be consistent with the provisions of the Treaty Establishing the European Stability Mechanism (TESM).

Upon a request by Cyprus on 25 June 2012 for financial assistance from the ESM, the Council decided on 25 April 2013 by Council Decision 2013/236/EU that Cyprus was to rigorously implement a macroeconomic adjustment programme.

On 24 April 2013 the ESM Board of Governors decided to grant, in principle, stability support to Cyprus and approved the Memorandum of Understanding on Specific Economic Policy Conditionality and its signing by the Commission on behalf of the ESM.

In accordance with Article 1(2) of Decision 2013/236/EU, the Commission, in liaison with the European Central Bank (ECB), and, where appropriate, with the International Monetary Fund (IMF), conducted the fifth review to assess the progress of the implementation of the agreed measures, as well as their effectiveness and economic and social impact. As a consequence of this review, an update was made to the existing macroeconomic adjustment programme, reflecting the steps taken by the Cypriot authorities by the second quarter of 2014.

Following the entry into force of Regulation (EU) No 472/2013, the macroeconomic adjustment programme was adopted in the form of a Council Implementing Decision. For reasons of legal clarity and legal certainty, the programme was readopted on the basis of Article 7(2) of Regulation (EU) No 472/2013. The substance of the programme remained identical to the one approved by Decision 2013/236/EU, but also incorporated the results of the review carried out in accordance with Article 1(2) of Decision 2013/236/EU. At the same time, Council Decision 2013/236/EU was repealed.

Council Implementing Decision 2013/463/EU was already amended by Council Implementing Decision 2014/169/EU. In light of the latest developments, it should be amended again.

The Commission, in liaison with the ECB and the IMF, has conducted the fifth review to assess the progress of the implementation of the agreed measures, as well as their effectiveness and economic and social impact. As a result, changes should be made in the areas of financial sector reform, fiscal policy and structural reforms, in particular with regard to: (i) providing an updated plan for the gradual relaxation of external restrictions, which the authorities commit to starting only after the successful completion of the comprehensive assessment and a smooth transition to the Single Supervisory Mechanism (SSM); (ii) further measures to strengthen the banks' management of non-performing loans; (iii) a requirement to conclude the follow-up on the 2013 audit regarding individual financial institutions, impose sanctions if applicable, and make the final decision public; (iv) the provision of further measures to improve the Cooperative Group's operational capacity; (v) the adoption by the Council of Ministers of the new comprehensive framework establishing appropriate corporate and personal insolvency procedures, as well as the adoption by the House of Representatives of the amendments to the legal framework in relation to foreclosures of mortgaged properties (those are two prior actions), with details on the required elements of those two new frameworks; (vi) a revision of the 2014 primary fiscal deficit target of no more than EUR 210 million (1,3 % of GDP) to reflect the fiscal performance in the first half of 2014, the submission of a proposal ensuring the fiscal neutrality of the welfare system reform and the achievement of the 2015 fiscal deficit target, while the primary surplus target for 2017 was revised down to 2,5 % of the GDP in order to smooth the fiscal adjustment over 2017-2018; (vii) the setting of further steps to operationalise the privatisation process in the Cyprus Ports Authority and the Electricity Authority of Cyprus; (viii) the appointment of the new Commissioners and the two Assistant Commissioners of the new tax department, the establishment of a common taxpayer database, and the adoption of necessary regulations to make the enhanced collection powers operational; (ix) the reform of immovable property taxation to be implemented in 2015; (x) the inclusion of further requirements to speed up the issuance of title deeds in the housing market; (xi) providing a draft action plan for the elimination of court backlogs, detailed statistics on backlogs and duration of proceedings, as well as establishing an administrative Court; (xii) the assessment of articles in the current law of the Cyprus Tourism Organisation that may hamper competition; and (xiii) a preliminary assessment of the technical and economic potential for further increasing electricity production by renewable energy sources and of the cost price of different sources of renewables compared to conventional primary energy sources, together with the inclusion of measures to improve the capacity and independence of the Cyprus Energy Regulatory Agency.

Throughout the implementation of Cyprus's comprehensive policy package, the Commission should provide additional policy advice and technical assistance in specific areas. A Member State subject to a macroeconomic adjustment programme experiencing insufficient administrative capacity is to seek technical assistance from the Commission, which may constitute, for that purpose, groups of experts.

The Cypriot authorities should seek the view, in accordance with current national rules and practices, of social partners and civil society organisations in the preparation, implementation, monitoring and evaluation of the macroeconomic adjustment programme,