Earlier this month, the fund completed its fifth, sixth and seventh review of the Mediterranean island nation under a loan programme designed to boost growth in the country. Cyprus is in the second year of the three-year $1bn Extended Fund Facility package.

The latest examination highlighted that continued proactive implementation of structural reforms to strengthen public finances would be critical to sustain Cyprus’ economic growth, improve the welfare system and job opportunities.

“Fiscal reforms should focus on revenue administration, public financial management, and public administration. Progress in privatisation and further efforts to improve the business environment and reduce unemployment are also needed,” David Lipton, IMF first deputy managing director said.

“Cyprus’s fund-supported reform programme continues to produce positive results. Economic and fiscal outcomes have been better-than-expected, with growth turning positive in the first quarter of 2015 and public finances exceeding targets.

“Nevertheless, high public debt together with sizeable contingent liabilities warrants continued prudence and efforts to lock in fiscal savings from better-than-expected macroeconomic developments.”

In March 2013, a €10bn international bailout by the troika– consisting of the IMF, European Commission and the European Central Bank – was announced for Cyprus in return for it agreeing to close the country’s second-largest bank.

Lipton added that liquidity and solvency in the banking system had improved, allowing the elimination of external payment restrictions.