“We had an unsustainable credit expansion during the previous years but even this problem has reached its peak and is becoming much more manageable now,” Georgiades who was commenting in an interview to CNBC, said. “The loan restructurings and the processes that will see the gradual reduction of this problem is underway”.
The finance minister said that the methodological definition of non-performing loans inflates their ratio as loan continues to be categorised as such for a period of time even if the borrower serves it following a restructuring. According to the Central Bank of Cyprus, in October the non-performing loan ration in the Cypriot banking system stood at 49%, which is €28.2 billion or one-and-an-half times the gross domestic product.
“It is a problem that will take time and effort but what we need is a stable, functioning banking sector,” he said. “I think that is something we have already achieved”.
Georgiades said that Cyprus is in “a much better situation” as following the banking and fiscal crisis of 2013, the country’s economy stabilised.
According to Cystat’s latest figures, the Cypriot economy contracted 0.3% in July to September compared to the previous quarter.
“We are very optimistic that this year we will see a return to positive growth rates,” Georgiades said. “We are of course determined to maintain the effort of consolidating the economy, reforming because we are not interested in mitigating the crisis but also creating the foundations for amore viable long run economic model”.
Source: Cyprus Mail