Finance Ministry welcomes upgrade by European Commission

The Finance Ministry on Wednesday released a statement welcoming the package of measures issued today by the European Commission, regarding the European Semester, which includes decisions related to the process of macroeconomic imbalances and upgrades Cyprus to a higher category.

Specifically, Cyprus is now classified under the category of “existence of macroeconomic imbalances” compared to the category of “excessive macroeconomic imbalances” it was placed in 2022.

It is also positive, the ministry explained, that the EU acknowledges a significant reduction in non-performing loan ratios and predicts that this reduction will continue.

Furthermore, the EU noted that private debt as a percentage of GDP will continue to decrease, supported by both nominal GDP growth and the deleveraging of households and businesses.

Additionally, it is recorded that public debt is steadily declining and is expected to further decrease in 2023 and 2024.

Regarding the current account deficit, the EU reported that this widened in 2022, despite the recovery of tourism, attributing it to strong domestic demand and high energy prices.

“We are pleased to note that, according to the Commission, various measures implemented under the National Recovery and Resilience Plan played a significant role in improving the indicators,” the ministry stated.

“These measures include actions for economic development, export support, and mitigation of excessive dependence on oil imports,” it added.

Moreover, the European Commission highlighted that the expiration of the suspension of foreclosures is a positive factor as it is expected to encourage borrowers to participate in debt restructuring, leading to further reduction of non-performing loans and releasing resources for expanding economic activity.

“The government will continue to promote measures to enhance the competitiveness of the economy and broaden the productive base, ensuring macroeconomic stability and the sustainability of public finances,” the announcement concluded.