NPLs need to be addressed urgently, says Fiscal Council
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.