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Business Cyprus

‘Private debt must be tackled’ deputies hear

The troika delegation met with the House Finance Committee members yesterday in a closed-door session

By George Psyllides

THE lack of liquidity and non performing loans (NPLs) were among the issues discussed by MPs and a delegation from Cyprus’ international lenders, the troika, on the island to carry their fourth review of the adjustment programme.

According to the chairman of the House Finance Committee, Nicolas Papadopoulos, the troika said “significant progress has been achieved and measures to help tackle the structural problems of the Cypriot economy have been put in place, hence the improved reviews of the economy.”

The lenders said Cyprus’ borrowing ratings have improved and there was interest from foreign investors to invest, according to Papadopoulos, who was speaking after a closed-door meeting.

Lenders however warned that “2014 will be a difficult year; significant problems remain on a social level and unemployment rates were very high.”

They think that the common goal should be the return to growth as soon as possible, Papadopoulos said.

DISY MP Prodromos Prodromou told reporters that in reality there was no news “and in the path to return to normalcy that was good news. Our lenders’ view is that implementation of the programme continues successfully.”

He said the public debt was on track and under control but Cyprus now had to tackle private debt in the next few years.

Cypriot households are among the most indebted in the EU with private debt reaching three times the GDP.

Non performing loans were also discussed during a meeting between the delegation and Auditor-general Odysseas Michaelides earlier Thursday.

“We raised issues concerning the banks, particularly the NPLs and high lending rates, which hinder economic growth,” Michaelides told reporters.

“We must strike the right balance in order for the banks to cope with this situation and start lending small and medium sized enterprises, but without creating insurmountable problems to the people, especially the ones in need.”

During the meeting, Michaelides stressed the need to increase the department’s personnel and make it fully independent.

“It cannot depend on the finance ministry for the approval of its budget.”

Lenders also met labour ministry technocrats to discuss measures to tackle unemployment.

Permanent secretary Giorgos Ashiotis said that there was an extensive discussion on issues concerning the labour market with emphasis on measures already in place or soon to be rolled out, to address employment issues in the most effective manner.

“The most important thing for the troika and us is to implement measures for youth employment” Ashiotis said.

He added that the ministry has a series of measures and schemes planned but it remained to determine how they would be funded.

A new meeting is scheduled for today that will focus on the implementation of the guaranteed minimum income, to be introduced on July 1, as part of the welfare reform.

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