‘Most important thing is reduction of NPLs’

The most important thing for the real economy is to reduce non-performing loans as they have in the banking sector so the economy can function without obstacles, Finance Minister Makis Keravnos said on Sunday.

“For us in Cyprus, the most important thing is to reduce non-performing loans in the real economy,” he told Politis.

“This will also help the banking system meet the lending requirements of the economy, either of businesses or households,” he added.

He said the recent adoption by parliament of the package on foreclosures submitted by the government was a positive development which will also have a positive impact on the Cypriot economy.

Commenting on the current developments with the Houthi attacks in the Red Sea, Keravnos said many shipping companies have decided to circumnavigate Africa, which increases the cost and delivery times of products.

“All this leads to inflationary pressures and price increases,” he said, adding that very recently the vice president of the European Central Bank warned of a recession.

Asked if interest rate cuts should not be expected in the near future, Keravnos replied that it is difficult to make predictions, but in the near future they may remain where they are, pending developments, although he expressed the hope there will be a gradual reduction.

Remarking that he has been criticised by Akel for leaving borrowers uncovered against banks, without the possibility of effective access to justice, Keravnos said “there has never been an obstacle to anyone who wanted to go to court,”

In relation to the pre-election commitment of President Nikos Christodoulides to change the scales for income tax from €19,500 to €24,000, the minister said decisions will be made after the completion of tax reform in 2025, pointing out that public finances should allow such a development.

He linked solving the problems of the economy with the solution of the Cyprus problem, saying that “the real and final solution of all our problems will be the solution of the Cyprus problem and the reunification of our country.”

Keravnos travels later on Sunday to Brussels to take part in the Eurogroup and Ecofin meetings.

The Eurogroup meeting will be held on Monday, where EU finance ministers will exchange views on policies to address the negative effects of energy prices on the competitiveness of the Eurozone. Ministers will also exchange views with IMF representatives on the latest economic developments in the euro area.

On Tuesday the finance ministers will attend the ECOFIN Council meeting, where the priorities of the Belgian Presidency of the Council for the first half of 2024 will be presented.