Re­turn to growth in 2015, cap­i­tal con­trols to be lifted

Financial Mirror (Cyprus) - - FRONT PAGE -

Cyprus is ex­pected to re­turn to growth next year, with the econ­omy ex­pected to ex­pand for the first time in four years by 0.5%, Cen­tral Bank chief Chrys­talla Ge­orghadji told MPs.

The cen­tral­banker was op­ti­mistic that the re­cov­ery was at a faster pace than fore­cast and that with the bank­ing sys­tem now seem­ing to have sta­bilised, the fi­nal cap­i­tal con­trols im­posed as part of last-years bailout fra­cas, will be lifted “soon”.

She told the House Fi­nance Com­mit­tee hear­ing that the Euro­pean Com­mis­sion’s re­vised fore­cast of a 2.8% con­trac­tion this year was “more re­al­is­tic”, up from ear­lier es­ti­mates of a 3.2% con­trac­tion.

Ge­orghadji told MPs that her op­ti­mism is based on the fact that the re­cov­ery so farhas been faster and re­sults have been bet­ter than ini­tially pro­jected.

Not­ing that the lo­cal banks were still not pro­vid­ing suf­fi­cient liq­uid­ity to the real econ­omy, Ge­orghadji said that the Cen­tral Bank has a strat­egy in line with ECB mea­sures to en­cour­age lenders to pro­vide credit in a sus­tain­able way and pro­vided bor­row­ers can re­pay their loans.

She said that the Cen­tral Bank fo­cus now is on the re­struc­tur­ing of loans in a rea­son­able, just and sus­tain­able way so that the ra­tio of non-per­form­ing loans (NPLs) in banks’ book will be re­duced. This, she added, will have a pos­i­tive ef­fect on in­ter­est rates and the eco­nomic cli­mate as a whole to the ben­e­fit of both house­holds and busi­nesses.

Ge­orghadji said she will be mon­i­tor­ing closely the sit­u­a­tion with big bor­row­ers and will be check­ing what mea­sures the banks have taken to re­cover, es­pe­cially as the rate of re­struc­tur­ings so far has not been to a “sat­is­fac­tory” de­gree.

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