NPLs need to be ad­dressed ur­gently, says Fis­cal Coun­cil

Financial Mirror (Cyprus) - - FRONT PAGE -

The is­sue of non-per­form­ing loans (NPLs) needs to be ad­dressed the soon­est pos­si­ble, Fis­cal Coun­cil Chair­man Demetris Ge­or­giades said on Mon­day, not­ing that no magic for­mu­las ex­ist, while pre­sent­ing his of­fice’s Au­tumn re­port.

The re­port in­cludes ref­er­ences to the eval­u­a­tion of macroe­co­nomic and fis­cal pro­jec­tions, the risks of a pre­ma­ture exit from the coun­try’s ad­just­ment pro­gramme, re­forms and the pen­sion sys­tem.

He said that so­cial ben­e­fits are dis­trib­uted bet­ter and more ef­fi­ciently than be­fore.

In his re­port, Ge­or­giades said that NPLs con­sti­tute the most im­me­di­ate and sig­nif­i­cant dan­ger to eco­nomic re­cov­ery and to medium-term fis­cal sta­bil­ity.

He also said that ac­cord­ing to IMF re­ports and sug­ges­tions, the high num­ber of NPLs re­sults in the com­mit­ment of funds in the banks and in their sub­se­quent higher cost. This in turn, has an ef­fect on house­holds and busi­nesses and de­ters in­vest­ment.

Ge­or­giades added that no magic for­mula ex­ists. Some coun­tries, he added, de­cided to sell NPLs to funds while oth­ers are de­lay­ing this process.

“The gen­eral as­sump­tion is that the sooner you solve the prob­lem, the faster the econ­omy will re­cover, the faster jobs will be cre­ated and in­come will rise,” he con­cluded.

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