By Stelios Orphanides
The managing director of the European Stability Mechanism Klaus Regling said that Cyprus continues to face challenges related to bad loans even after completing its programme, the Cyprus News Agency reported on Wednesday.
“The completion of the programme is for Cyprus a huge success, especially if you take into account the situation in Cyprus three years ago, when the programme began,” Regling was cited by the Cyprus News Agency as saying, on Wednesday.
Regling said that Cyprus should continue economic reforms and avoid putting public finances at risk.
While non-performing loans are the Cypriot economy’s biggest problem, as their ratio is the highest in Europe, the government’s intention to continue on the reform course is reassuring, said the head of the ESM which made more than €6bn in funds available to Cyprus as part of its March 2013 bailout and is Cyprus’s largest creditor.
Cyprus used only 70 per cent of the €10bn bailout funds earmarked for its rescue three years ago, Regling said.
“Global investors were read to buy Cypriot bonds last year,” he said. “With the completion of the Cypriot adjustment programme, we now have four success stories in the euro area after Ireland, Portugal and Spain exited their (respective) programmes earlier”.
Regling said that in addition to the International Monetary Fund and the European Commission, the ESM will also carefully monitor future economic and financial developments in Cyprus, evaluate economic performance, and send timely warnings in order to ensure that the country will be able to pay back its debt to the institution.