The institutions participating in the post-programme review and Cyprus` Minister for Finance Harris Georgiades briefed today the Eurogroup on the outcome of the recent post-programme surveillance mission to Cyprus.
According to a written statement, they reassured the Ministers that the Cypriot authorities remain committed to continuing sound economic policies.
They also confirmed that there was no risk of non-repayment of the loans Cyprus had received from the European Stability Mechanism in the context of its macroeconomic adjustment programme of 2013-2016.
Following the meeting President Dijsselbloem noted that the institutions briefed the Ministers on their post-programme surveillance of Cyprus, one year after the end of the programme. He stated that there is very good news on the economic recovery which, together with progress in previous years in fiscal consolidation, has led to a strong primary surplus.
`If we go back to the debt of the Cypriot crisis, you will remember that there was a contraction of, I believe, minus 6%. There is now a growth rate in Cyprus of, I believe, 3% or maybe even over 3%. Our Cypriot colleague commemorated that before the crisis of course, the Cyprus was also at high growth figures, but then it was based on over expenditure on the public side and over-crediting in the banking sector”, said the President.
“Now, it is solid growth and not based on risky economic developments.
So, very strong and very good performance in Cyprus, on which, of course, we complimented the Cypriot authorities.
The Cypriot government also reconfirmed its commitment to the reform effort. The time that they still have will be used to the max to work further on dealing with some of the remaining vulnerabilities in Cyprus, as in the financial sector, NPLs and any budgetary challenges. So that was a good news to end with”, he said.
On behalf of the European Commission Pierre Moscovici noted that the situation in Cyprus remains positive: “growth picked up last year and is expected to remain strong in 2017. Unemployment is still high but the situation is improving”, he said.
He also commented that on the fiscal front, while the headline numbers are good: “we have expressed still some concern – already last autumn – at the worsening structural balance. Cyprus still needs to pursue prudent fiscal policies and the current bright economic climate should make that easier to do. We will of course be looking carefully at the upcoming Stability Programme in this light”, stressed Pierre Moscovici.
On the financial sector front, he noted that there are encouraging signs regarding the reduction in non-performing loans, but more sustained efforts are needed on this front as this is one of the key challenges still facing the Cypriot economy.
“There is also scope to renew the structural reform momentum in order to lift Cyprus` growth rate in the longer term. We will of course come back to these issues next month when we present our country-specific recommendation to Cyprus and assess its progress in addressing macroeconomic imbalances”, stressed the Commissioner.