IMF says chal­lenges will re­main be­yond bailout pro­gramme

Financial Mirror (Cyprus) - - FRONT PAGE -

The Cypriot econ­omy will face im­por­tant chal­lenges even af­ter the exit from the bailout pro­gramme, ac­cord­ing to Mark Lewis, the out­go­ing IMF mis­sion chief for Cyprus.

The core chal­lenge, Lewis told a press brief­ing, is the high level of the non per­form­ing loans which has to be ad­dressed in or­der for the banks to lend to busi­nesses and to house­holds again, as this will lead to growth.

“The pro­gramme is pro­duc­ing re­sults” Lewis noted, giv­ing credit to the author­i­ties and the Cypriot peo­ple for their ef­forts.

Nev­er­the­less he stressed that “look­ing ahead we are not all the way there” and noted that there are still im­por­tant chal­lenges that re­main and will con­tinue in the com­ing months in the con­text of the pro­gramme and af­ter the pro­gramme as well.

He said that the prob­lem of the NPLs in the bank­ing sys­tem is an “es­sen­tial chal­lenge”, linked to growth, jobs and in­comes.

He noted that the new in­sol­vency and fore­clo­sure frame­works must be­come fully op­er­a­tional, the author­i­ties must deal with prob­lem of ti­tle deeds and another step is to deal with the ac­cess in loan sales, “which will en­able banks to deal with the NPLs prob­lems and go back in the busi­ness of lend­ing to house­holds and to busi­nesses”.

Lewis said that the public fi­nances are quite pos­i­tive, but “public debt lev­els are still high”. He added that it is im­por­tant to main­tain sound public fi­nances in the pe­riod ahead, “while at the same time en­sur­ing suf­fi­cient public spend­ing to pro­tect the poor and to sup­port growth ori­ented public spend­ing”.

This also in­cludes re­forms to im­prove the busi­ness and reg­u­la­tory en­vi­ron­ment to fa­cil­i­tate eco­nomic ac­tiv­ity, he noted.

A staff re­port re­leased by the IMF on the eighth re­view of Cyprus’ bailout pro­gramme noted that “some re­forms un­der the pro­gramme have en­coun­tered de­lays, and with the May 2016 leg­isla­tive elec­tions in sight, im­ple­ment­ing the on­go­ing struc­tural re­forms will re­main a chal­lenge”.

The IMF’s Ex­ec­u­tive Board com­pleted last Wed­nes­day the eighth re­view of the eco­nomic ad­just­ment pro­gram and ap­proved the dis­burse­ment of about EUR 126 mln, which brings to­tal dis­burse­ments to date to EUR 882 mln.

Newspapers in English

Newspapers from Cyprus

© PressReader. All rights reserved.