“Small glimmer of economic hope is emerging”

The European Bank for Construction and Development, the EU’s development bank, plans to pump about 200 mln euros into the Cyprus financial and energy sectors in 2015, as part of the 600 mln programme until the end of the decade.

Visiting EBRD Vice President Phil Bennett said on Monday after a meeting with President Nicos Anastasiades that investments to date include 107.5 mln injected into the Bank of Cyprus last September as part of a 1 bln capital raising programme and that EBRD plans to buy BOCY bonds as well.

Bennett added that the review of private sector projects is in a final stage with a focus on investments in the financial sector, energy, privatisations and providing finance to projects of individual companies.

Anastasiades said that the EBRD’s role is crucial as its investments also help to reinstate confidence in the Cyprus economy, sending out positive signals to the international markets and foreign investors.

“The EBRD’s experience and know-how in areas where there is a vacuum in financing, such as the restructuring of banks and the support to small to medium sized enterprises (SMEs), significantly contributes to the recovery of economies where the bank is present and active,” he said.

Also present at the meeting were Finance Minister and EBRD Governor Haris Georghiades and Under Secretary to the President in charge of public sector reform, Charalmbos Petrides. Bennett was accompanied by the EBRD’s Resident Director Libor Krkoska.

The bank had said when it opened its resident office in Nicosia last December that the goal is to support the recovery of the country’s economy which is suffering from a protracted recession following a deep financial crisis.

Cyprus became a recipient country for EBRD investment following a decision by the bank’s shareholders in May 2014. Its engagement on the island is temporary and envisaged to last until 2020 by when the bank expects to invest at least 100 mln euros per year in the country.

Bennett’s schedule also included meetings with the business community and representatives of civil society, as well as Privatisations Commissionair Constantinos Herodotou.

In an article published in February, Krkoska suggested “a small glimmer of economic hope is emerging in Cyprus.”

He said that “Cyprus is defying the broader trend. Now we see a rebound -a modest 0.7% rise - but a rebound all the same.”

Libor Krkoska had pointed out that Cyprus is a small and flexible economy “and its agile response to its economic problems has led to this better-thanexpected performance.”

He said the key to the successful turnaround has been a determination on the part of the Cypriot authorities to drive through necessary reforms.

Meanwhile in the banking sector the biggest challenge remains reducing the debilitating level of non-performing loans that are close to 50% of total loans.

“The EBRD is also prepared to support the work by banks who are already beefing up their loan recovery departments. We look forward to seeing NPLs dropping back to the average level for the eurozone.”