The International Monetary Fund said on Wednesday it had approved a bailout of 1 billion euros (over $1.3 billion) for Cyprus, with the first installment of $110.7 million already allocated to the country’s government.

The loan “is intended to stabilize the country's financial system, achieve fiscal sustainability, and support the recovery of economic activity to preserve the welfare of the population," the IMF said in a statement.

The bailout is part of a joint ten billion euro ($13 billion) financial assistance by the Eurogroup and the International Monetary Fund that the debt-stricken country is to receive during the next three years. The European Stability Mechanism (ESM), an intergovernmental institution that was set up to preserve the financial stability of the eurozone, is expected to provide up to 9 billion euros ($11.6 million) and the International Monetary Fund is to contribute around 1 billion euros ($1.3 million).

The ESM transferred 2 billion euros ($2.6 billion) in cash to the Cypriot government on Wednesday. The second ESM installment, of up to 1 billion euros ($1.3 billion), is due before June 30, 2013.

RIA Novosti