“Small glim­mer of eco­nomic hope is emerg­ing”

Financial Mirror (Cyprus) - - FRONT PAGE -

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.”

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