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Cyprus exits economic adjustment programme

Eurogroup finance ministers have approved the Cyprus government’s decision to exit its Economic Adjustment Programme and commended the Cypriot authorities for the overall successful implementation of the programme.

Cyprus exits economic adjustment programme

Cyprus Finance Minister Harris Georgiades

EUROGROUP finance ministers have given their formal approval for Cyprus to exit its three-year Economic Adjustment Programme that expires officially on 31st March.

The ministers held a meeting in Brussels during which the Cyprus Finance Minister Harris Georgiades presented a report on Cyprus’ progress in implementing the reforms and complying with the requirements under its €10 billion programme that was concluded in March 2013.

The Eurogroup will continue supporting the Cyprus reform process in the context of post-programme surveillance and of the regular EU and euro-area specific monitoring frameworks.

Georgiades said that Cyprus is determined to continue with reforms contained in its Economic Adjustment Programme that are still pending, which include the privatisation of the Cyprus Telecommunications Authority (CYTA).

Cyprus drew €7.25 billion from the total assistance sum available of €10 billion and beat all projections of a sharp drop in its gross domestic product (GDP), achieving a growth of 1.4% last year after a four year recession. It also managed to keep its sovereign debt to about 106% of its GDP, 20 percentage points below projections.

Cyprus is the fourth member of the euro area to exit its bailout following Ireland, Spain and Portugal.

Speaking to reporters last Thursday Georgiades said: “The completion of the programme is not the end of the road, but it is a new beginning, which will see dedication, commitment and effort, in the direction of further reforming the economy of Cyprus, staying clear of the mistakes of the past.

“We had the chance to review the good progress achieved during the last three years, which saw the stabilization of the banking sector, the consolidation of public finances, the promotion of much-needed structural reform, the re-establishment of market access and, primarily, the return to positive growth rates.”

Further reading

Eurogroup statement on Cyprus – 7th March 2016

Readers' comments

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  • Disappointed says:

    Short memories, new generation, same deceptions, different guises. Winners and losers . Remember the people are the same, nothing changes except time!

  • Grant says:

    I truly trust that the Title Deeds saga gets sorted out and processes around this issue begin to follow internationally accepted procedures. : one buys, pays what is due (or obtains a valid mortgage), and receives one’s Title Deeds without any shenanigans. Hopefully, the days of dubious bank actions, crooked developers, suspicious actions from civil servants, and lawyers acting illegally are numbered! If at least this is sorted out, Cyprus could be on the road to real recovery partly through a trustworthy and honest property market which could lead to increased property purchases both locally and more particularly from abroad. The uncertainties are all that are holding me back from purchasing a property for cash! Right now, I’m still in “wait and see” mode… otherwise another EU country will get my cash!

  • Denton Mackrell says:

    The present government, and especially the combined efforts of the Finance Minister and the Auditor General, have indeed done well in barely 3 years since the collapse. My big concern is recidivism.

    The clamouring of this, that and the other public sector self-interest group for higher wages and even additionally recouping foregone cuts started a year or so back, as soon as it became clear that Cyprus would exit Troika management in March 2016. That clamouring is now deafening, with threats of public sector strikes from CYTA and EAC and now the nurses. There are already signs of capitulations.

    Largesse at the public expense, e.g. the recent double compensation for passengers who had pre-paid with Cyprus Airways, is the same old curse that existed under previous governments. The culture has not really changed and populist decisions and actions in search of easy votes blot out any real progress.

    It really came home to me recently when an English estate agent, married to a Cypriot and resident in Cyprus for 25 years, expressed horror and exasperation at overhearing a small group of developers talking about their ‘strategy’ now that Troika supervision would be over. It went something along the lines of: ‘Well, first we screwed the Brits, then we did the Russians and the Iranians, and now it’s the Chinese. Who’s next? Business as usual, gumbares!’

    If this vignette is anything to go by, Cyprus developers have learned nothing from the very crisis they largely created. Intelligence may be defined as the capacity to learn from mistakes (one’s own and those of others). Regrettably, we can look forward to another developing crisis involving the property sector.

  • Tearing my hair out says:

    Whilst there is a little progress – I 100% align my sentiments with the closing remarks from Peter Davis’ economics teacher.

    It IS the bottom line that counts. As many of these Troika bail out discussions have been undertaken out of the public eye. We will never know exactly what was discussed (and most probably executed thereafter). Many E.U decisions have been taken away from the public (mostly harnessing money taken FROM the public) by a body of people who eventually report up to an unelected elite. Despite the individual competencies of single individuals (wherever and however they may be) this should still be a massive cause for concern (and considerable ongoing questioning) from the public. Such actions are not ‘rabble rousing’ but a true definition of democracy.

    I am far from convinced about the ‘recovery’ of Cyprus (as I am indeed about the U.K). Property is like any other commodity on earth – it’s simple Adam Smith supply & demand. In 2005-7 there was insane demand for property (investment or otherwise). The banks loaned money without any form of due diligence and employing highly dubious (not to mention most likely illegal) practices to close sales of loans. Debt is still going up – and many of the much needed, much tighter financial regulatory frameworks have not materialised. Indeed – banks all over the world are still operating Collectivised Debt Obligations (now called something else) that were in no small way responsible for crashing the world’s markets in 2008 (and could again, and again, and again).

    The property market in Cyprus is STILL a very big mess. Like a pile of rotting rubbish – the longer you leave it – the more it stinks and attracts flies and vermin. Before anyone, anywhere gets terribly excited about the future – the mess still needs properly attending. There have been some very comprehensive documents written about plans and recovery – most of which are hard to follow – and even harder to keep track of.

    My ‘strategy’ is to keep positive long term but not get sucked into short-term rhetoric and spin.

  • Deanna says:

    To continue from SteveR: yes we’ve done well with the present incumbents and I have special respect for the Finance Minister who has his finger on the button. Let’s hope future elections don’t give us a return to the old koumbaros mode or we will soon be sliding down the same slippery slope.

    And I also agree re pre-EU Cyprus. My late husband and I first visited the island in 1989, and in 1990 we purchased our house. A thriving, generous, warm-hearted island where no doors were locked and anyone would speak to you.

    And look at it now…(although it’s still where my heart is).

  • Peter Davis says:

    Meanwhile back on the farm…

    The taxpayer has just paid out €3.3 million to people who bought tickets from Cyprus Airways, not forgetting that their credit card will also refund them, and €100,000 of that was paid to a travel agent for …. “admin expenses”. It obviously costs a lot to book on-line?

    How long with decisions like that before we’re back asking for more?

    As my economics teacher used to say. “You can say what you like, it’s the bottom line that counts.”

  • Steve says:

    Where Cyprus goes from now will ultimately depend on the citizens and how they vote in the next national elections. If they want another dose of Christofias – style communist dogma, we can be right back in an insolvent mess inside the life of one parliament.

  • Steve R says:

    I have visited and lived in Cyprus for the past 11 years and have seen the island go from being a thriving place prior to joining the EU to the present situation it finds itself in today. As with most countries that initially joined the EU there was an abundance of money available and loans from the banks are given out without due diligence, to the masses.

    It does appear that the new Cyprus government have done well to satisfy the terms of the loan given to the island and meet requirements of Troika which is no mean task. Overall the people have not suffered to the extent that other people in Greece and other bailout countries have done.

    I haven’t seen any soup kitchens or people living rough on the streets. Well not in Paphos anyway. So on the surface it does look like the Government and the people of Cyprus have done well. If they can start and get the confidence back into the property market then we should be able to get back to the good old days prior to 2005/6

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