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Cyprus gov't upbeat ahead of first troika review

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July 16, 2013 09:10 AM EST | AP

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NICOSIA, Cyprus — Cyprus' finance minister said Tuesday that he's optimistic international creditors will confirm that the country is sticking to the terms of its financial rescue when they complete their first assessment.

Haris Georgiades said the quickest way to shed the harsh terms of the 23 billion euro ($29.9 billion) bailout that the country signed in March is it to faithfully implement the reforms demanded.

To avoid bankruptcy and the collapse of its outsized banking sector, Cyprus agreed to impose steep losses on large depositors in its two biggest commercial lenders, amounting to some 13 billion euros. In return, it got a 10 billion euro loan from its euro partners and the International Monetary Fund.

Cyprus' second largest bank, Laiki, was wound down and folded into the biggest Bank of Cyprus which continues to be restructured. To avoid a run on the banks alongside a sharp drop in client trust, Cypriot authorities imposed limits on money transfers and withdrawals which have hit an already battered retail sector.

Officials from the European Commission, the European Central Bank and the IMF begin their two-week assessment Wednesday. The other countries that have received bailouts, such as Greece and Portugal, also have regular visits from the inspectors.

Georgiades said the focus will be on quickly restoring the banking sector back to health in order to get the tanking economy moving again.

"The speedy exit from restructuring will allow us to take new steps that will further ease and ultimately eliminate capital controls," he told reporters.

Georgiades said that the government aims to slash spending by 11 percent by next year, but won't impose new taxes.