European commissioner Pierre Moscovici said that Cyprus needs to complete push forward with its reform agenda and strengthen the effectiveness of its foreclosure and insolvency law in order to reduce the high stock of non-performing loans of its banks in order to boost growth and minimise fiscal risks.
“Today Cyprus’s economy is recovering thanks to strong tourism activity and private consumption and supported by declining price,” Moscovici who holds the resort for economic and financial affairs taxation and customs told reporters in Brussels on Tuesday. “This recovery is fragile. We are conscious of risks linked to weak export environment and domestic imbalances”.
Even after Cyprus’s excessive deficit procedure was closed in May, “fiscal risks remain quite significant and there is no room for complacency,” Moscovici said. “To improve growth and employment Cyprus needs to complete the pending structural reforms as well as fully implement the action plan for growth”.
Given the high stock of the non-performing loans in the banking sector, which account for almost half of their loan portfolio, as well as the high private debt levels, the result of loans for consumption purposes, “it is vital to implement and ensure the effectiveness of the insolvency and foreclosure framework,” he said.
Even as the economy of Cyprus which completed its economic adjustment programme in March, part of a €10bn bailout agreed three years before, is again growing, the government needs a targeted programme to address unemployment “which is still very high, especially for the young people and the long term unemployed,” he said.