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The Government welcomes the fact that the package of measures adopted today, 24 May 2023, by the European Commission in the context of the European Semester which, inter alia, includes its decisions on the macroeconomic imbalances procedure upgrades Cyprus to a higher category.
Specifically, Cyprus is now classified in the category of "existence of macroeconomic imbalances" compared to the category of "excessive macroeconomic imbalances" where it was in 2022.
We also consider it positive that the EU finds a significant reduction in the rates of non-performing loans and predicts that the reduction will continue.
Also positive is the fact that the EU records that private debt as a percentage of GDP will continue to decline, supported by both nominal GDP growth and household and corporate deleveraging.
It also records that government debt is steadily declining and is expected to fall further in 2023 and 2024.
For the current account deficit, the EU reports that it widened in 2022, and this despite a rebound in tourism, attributing it to strong domestic demand as well as high energy product prices.
We note with satisfaction that, according to the Commission, the various measures implemented under the National Recovery and Resilience Plan, such as measures to grow the economy, support exports and mitigate over-reliance on oil imports, played an important role in improving the indicators.
The Commission also notes that the end of the suspension of divestments is a positive element as it is expected to encourage borrowers to engage in loan restructuring, leading to a further reduction in non-performing loans and freeing up resources to expand economic activity.
The Government will continue to promote measures to enhance the competitiveness of the economy and expand the productive base, ensuring macroeconomic stability and sustainability of public finances.
/SX
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