Finance Minister Constantinos Petrides attended today's Eurogroup meeting, which also discussed the 13th Post-Programme Surveillance Report for Cyprus.
The conclusions of the Commission and the Institutions' report state that the Cypriot economy exceeded growth expectations in the first half of 2022, making particular reference to the improvement in public finances, which is attributed to high growth, but which is expected to slow down in the coming months and adversely affect public finances.
Regarding the banking sector, it is reported that the stock of non-performing loans (NPLs) remained stable after a significant decline last year, while the impact of the Russian war of aggression against Ukraine on the financial sector did not pose any particular problems. The report stresses, however, that the continued suspension of the implementation of the divestment framework runs counter to the objective of further reducing Non-Performing Loans (NPLs).
In his intervention, the Finance Minister welcomed the conclusions presented in the European Commission's and the institutions' report, as they converge with those of the Government.
The Minister said that the Cypriot economy exceeded growth expectations in the first half of 2022. Fiscal performance exceeded expectations with public debt showing the largest reduction as a percentage of GDP in the EU, supported by strong growth across the economy. The economy is expected to slow down in 2023 due to the impact of rising interest rates and declining disposable income.
Regarding the banking sector, Petrides stressed that strong collective efforts have been made in recent years by all stakeholders to reduce NPLs in the banking sector and significant progress has been made with NPLs falling by more than 100% of GDP. The Finance Minister underlined the Government's commitment to continue reducing NPLs with clear policies, some of which are included in the Recovery Fund.
In conclusion, the Minister noted that the main policy objective of Cyprus remains to ensure macroeconomic stability, further reduction of public debt and NDPs in order to facilitate growth and job creation.
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