European Stability Mechanism: Cyprus Now One of the Best Performing Economies in Europe
Cyprus is now one of the best performing economies in Europe, European Stability Mechanism’ Managing Director Mr. Klaus Regling said, on November 2nd, 2017, adding that like every economy challenges remain also in Cyprus.
He was speaking in statements after a meeting with Cypriot Finance Minister Harris Georgiades, in Nicosia, the Cyprus News Agency reports.
On his part, Mr. Georgiades spoke of the satisfactory growth levels, the shrinking unemployment and the creation of economic activity noting that the Cypriot economy now needs to set a solid foundation for this growth prospect in order to do even better, referring also to the fact that by the end of the year public debt will drop below 100% of GDP.
“Every year when I come to Nicosia the situation is better than the previous year; and it is always a lot better, there have been positive surprises,” Mr. Regling said.
Obviously, he added, “growth is much stronger than anybody expected, the fiscal surplus is very credible and unemployment is coming down rapidly.”
“With this good data, with this good performance Cyprus is now one of the best performing economies in Europe,” he stressed, noting that this “is very rewarding and very positive.”
He continued expressing the view that “it confirms that the approach taken in 2013 at the beginning of the crisis was the right one. It was not easy. It was not easy for the people of Cyprus but it has paid off.”
“When I look at the forecast it truly looks very positive,” he said.
Of course, the EMS Managing Director noted, that “every economy has some challenges and challenges remain also in Cyprus.”
To that extent he referred to the banking sector where the level of non-performing loans is relatively high and profitability is low. Mr. Regling commented on this “I think banks need to continue to work on that and the government should also look how it can support this process by reforming the legal system, making sure that the insolvency law works well.”
He also said that the government should continue on the privatisation reform of the public sector more generally.
“I am very encouraged that the minister repeated here, as he did this morning, that the prudent fiscal policy of the last few years will continue in the future. So, I think all that is very encouraging we support that very much from the ESM,” he pointed out.
At the same time, he said he is grateful because Mr. Georgiades “supports the discussion we have in the Eurogroup and the Euro area more generally about deepening the European Monetary Union (EMU) and possibly a stronger role for the ESM.”
On his part, Mr. Georgiades said that during their meeting he reiterated the Cypriot government’s commitment “to continuing this effort which allowed us to complete the MoU (the legal basis of Cyprus’ adjustment programme), to recover from recession and to be, solidly, on a path of recovery and growth.”
In addition, the Cypriot Finance Minister mentioned that despite the fact that the presidential elections are very close, “the prudent management of public finances remains unaffected.”
Mr. Georgiades also noted that “we have reached a satisfactory level as regards growth rates, reduction of unemployment and creation of economic activity.” In the coming period what needs to be done is to lay solid foundations for the growth prospect in order to do even better, he added.
He further pointed out that during their meeting he had briefed Mr. Regling over the ministry’s planning and management of public debt including that “by the end of the year public debt will be below the symbolic threshold of 100%.”
Referring to the discussions for the ESM’s future role, Mr .Georgiades noted that “I can repeat in public what I told to Mr. Regling, that our experience and cooperation with ESM was and continues to be excellent.”
“It is a European institution that we know and trust and we have no reservation as a member state and as an ESM member to support an expanded role and competencies for ESM,” Mr. Georgiades concluded.
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