After the economic haircut of 2013, President Anastasiades set up a National Economic Council to advise him about economic issues. The idea was that with a team of economists advising the president a repeat of the mistakes of the past that led to the economic meltdown and banking crisis of 2013 would be avoided.
Nobel Laureate Professor Christophoros Pissarides was appointed chairman of the Council, which consisted of academics and respected economists, and there were some meetings with the president in the beginning. Eventually, the president decided he did not require the advice of the experts and stopped calling meetings with the National Economic Council.
Cyprus exited the assistance programme, the citizenship by investment scheme was bringing money into the country, tourism was thriving and the president believed that the economy was back on automatic pilot. There was no need to consult the Council, which would have advised caution and prudence, as he embarked on his re-election bid and planned to revert to the old spending habits. After all, the main message of his campaign was the economic success story of his first term.
This success story is now being threatened by the failure of the banks to significantly reduce NPLs and the president could do with a little help from the National Economic Council even if it just takes a stand in favour of the latest amendments proposed by the government to make the foreclosures law more effective. Representatives of the political parties were last week called to the finance ministry and warned about the disastrous consequences for the banking sector of not approving the amendments, but they persisted with their populist rhetoric afterwards.
If the Economic Council met the president and Professor Pissarides subsequently made a statement about the need to drastically reduce NPLs because the alternative would be disastrous for the economy, the government case for the amendments would be strengthened. Who would people believe, the Nobel Laureate economist or the ruthless populists like Perdikis, Lillikas, Christou, Kyprianou and Theocharous? Would any rational person think that Akel, which is vehemently opposed to the amendments, has a better understanding of economics than Pissarides?
Pissarides may be living in the UK, but if the president asked for his help, we are sure he would be on the first plane to Cyprus. It is critically important for the legislature to approve the amendments to the foreclosures law and the government has to take every possible step to ensure Akel and the populists do not block the bill on the pretext they are protecting the primary residence. This is a battle that the country cannot afford for the government to lose.