By Jean Christou
THE legal framework to address the issue of non-performing loans (NPLs) needs to be in place by the end of the year, President Nicos Anastasiades said last night.
He was addressing the annual general meeting of the Employers and Industrialists Federation (OEV) in Nicosia. Giving businessmen a rundown on a number of ‘positives’, Anastasiades referred to foreign investment interest, ‘good reports’ from the troika of international lenders, and movement on energy, shipping and tourism, saying they would all yield results and that some already had.
On the flip side however, he referred to the NPLs, saying the issue was “the main challenge”.
“To meet the challenges of the banking sector, the government and the Central Bank are making concerted efforts to identify the best possible solution under the circumstances,” said Anastasiades.
He also said the lack of sufficient liquidity in combination with the high interest rates was limiting the possibility of financing the business sector. To mitigate this, he said the government was forging ahead with the agreement between Cyprus and the European Bank for Reconstruction and Development (EBRD) reached last week under which Cyprus the bank will provide €600m for investment between 2014 and 2020.
“There are no magic bullets, and these efforts are not going to be easy. We must all know that,” he said adding that it would not be wise for anyone to engage in “dangerous brinkmanship or unproven recipes that involve risks much greater than the measures that we have agreed to stick to and to consistently implement.”
Outgoing OEV president Filios Zachariades was more pessimistic. Referring back to the 2013 banking crisis in his address, he said: “The loss of deposits of households and businesses in one night, the collapse of the country’s second largest bank, freezing the market, capital restrictions, job losses, uncertainty about the present and fear of the future were the main features of 2013.”
“Fortunately or unfortunately, our choices are limited and we can go one of two directions. The first option is to continue to cast blame and level accusations at each other so nothing will change and with mathematical precision we will meet again at the same, or an even worse point, in the future. The second option is to learn from our mistakes and end once and for all the reasons that contributed to this economic disaster,” he said.
There had been a few glimmers of hope, Zachariades said, citing the troika’s positive reviews and the extended shop opening hours “and finally we entered the twenty-first century.”
The biggest remaining challenges were to restore liquidity and tackle unemployment through the development and consolidation of economic and institutional frameworks to ensure future growth.
“Particularly in terms of banks, politicians must finally stop intervening and take steps to prevent collusion and other undesirable phenomena,” he said.
“Also as attractive as our country is as a destination for investment, so repellent is our bureaucracy. Why would anyone be interested in investing their money in Cyprus when bureaucracy, fragmented services and delays are such a headache?”
Referring to the creation of a casino, Zacharides said there was already a serious delay because no one can decide whether it will be state-run, municipal-run or operated by a foreign investor.
“The investor needs certainty and speed, not ambiguity,” he said. “The state should do everything possible to facilitate businesses to operate.”
He said this did not always have to mean direct financial support to businesses but could mean the removal of bureaucratic barriers.
“If the crisis has taught us one thing it’s that we cannot continue with the same mentality that brought us to this point,” Zachariades said.