articles | 17 September 2015

Eurogroup declares Cyprus a success story

A Eurogroup meeting recently declared Cyprus a success story, praising the conclusion of its seventh review of the economic adjustment programme, which took place in July 2015.

Held in Luxemburg, Finance Minister Harris Georgiades was evidently pleased with the results tweeting “Eurogroup positive on Cyprus, noting that economic recovery is gaining strength.”

A statement by the Eurogroup finance ministers said, “the fiscal developments continue to exceed expectations, the financial situation of the banks is showing signs of gradual improvement and some progress has been noted on important growth-enhancing reforms.”

The Eurogroup endorsed – in principle – the disbursement of the next tranche of financial assistance – €500 million – in October that needs to be formally approved by the European Stability Mechanism (ESM).

The International Monetary Fund (IMF) Executive Board is expected to decide on the disbursement of about €125 million on September 23.

In a statement the Eurogroup said it is “encouraged that the economic recovery in Cyprus is gaining strength, the labour market is showing signs of stabilisation, although unemployment remains at a high level, andthat the economy showed overall resilience in the past months.”

It sought to stress that the “excessive level of non-performing loans” needed to be addressed and that it was a top priority for the island to let it “reignite credit growth and ensure that banks continue to improve their resilience”.

The Eurogroup spurred Cyprus to implement the insolvency legislation and the foreclosure framework to speed up the reduction of arrears as well as the necessity to pursue financial sector reforms including legislation to facilitate the sale of loans.

Commending Cypriot authorities for progress thus far, it called on them “to keep up the reform momentum” and implement privatisation and public administration reform that “is essential in order to restore Cyprus’ growth potential, while safeguarding the protection of the most vulnerable groups.”

Source: Cyprus Mail

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