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European Stability Mechanism (ESM) Notes Continued Cypriot Reforms Required to Mitigate Economic Risks

MEDIA / Articles / 2019 / European Stability Mechanism (ESM) Notes Continued Cypriot Reforms Required to Mitigate Economic Ris
The European Stability Mechanism (ESM) reports on Cyprus’ latest ratings on the basis of economic growth, continued prudent fiscal policy, the comeback of the financial sector, and the removal of a significant portion of non-performing loans (NPLs), through the dissolution of Co-op Bank (CCB), which in turn contributed to a reduction in risk to the financial system.

However, the liquidation had negatively impacted the public finances and the number of NPLs, despite the reduction, remain sizeable; consequently, ESM recommends for Cyprus to maintain and ensure adherence to its fiscal policies and reform efforts to mitigate the risks, internal and external, to its economy.

Private consumption hikes and increased productivity to pre-crisis levels reflected ongoing Cypriot efforts to boost the economy and reduce the unemployment rate; evidenced in the ratings upgrades from major ratings agencies. Should Cyprus sustains the reform efforts of its finances, the Cypriot economy looks set to further recover from its crisis and emerge stronger and better in the years to come.
 

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