Insider Economy Autumn economy forecasts clouded by legislative amendments 

Autumn economy forecasts clouded by legislative amendments 

Autumn could bring negative rating pressure on the Cyprus economy if recent legislative actions in the banking sector failed to significantly reduce non-performing loans (NPLs) which now stand at 30%.

This clear message by four major credit rating agencies comes at a time when parliament approved amendments to the Mediterranean island’s foreclosures bill which basically slow down the process. Thus, making it harder for banks to successfully tackle the crucial problem of NPLs.

Finance Ministry sources told INSIDER that it is hard to tell how rating agencies will act with the most probable scenario being that they will not upgrade Cyprus’ economy.

The return of Cyprus’ economy to investment grade after six and a half years by S&P’s, Fitch and DBRS took place in the autumn of 2018. Their rationale was that the Cypriot economy would continue to grow at a solid pace through 2021.

Also, because some €7 billion NPLs from the collapsed Co-op bank had been transferred to KEDIPES. Moody’s rating had kept the Cyprus economy below investment grade.

S&P’s, Fitch and DBRS maintained a stable economic outlook for Cyprus during 2019. In their rationale, the agencies said that Cyprus’ ratings were based on a broad-based economic recovery and a substantial budget surplus but with the crisis legacy of high public debt and non-performing loans in the banking sector.

However, things will not be the same in the upcoming autumn assessments as the amended foreclosures legislation approved by parliament would most likely leave the state’s debt unchanged.

S&P is expected to make an assessment on September 6, followed by  Moody’s on September 20, Fitch’s on October 11 and DBRS on November 15.

Moody’s already sounded alarm bells in its last report on Cyprus noting that the new foreclosures bill is yet another obstacle in the struggle for NPLs to be reduced. And that this could stand in the way of a much-needed upgrade of the economy.

 

Read more:

https://in-cyprus.com/moodies-foreclosures-law-changes-hamper-banks-efforts-to-reduce-npls/

Top Stories

Medical equipment, consumables from China to arrive in Larnaca

An Aegean airlines aircraft carrying medical supplies from China through Athens will land at Larnaca airport in the small hours of Saturday, the CNA...

Supreme Court rules civil servants 2013 pay cuts were legal

The Supreme Court on Friday ruled that cuts imposed on the pay and pensions of public servants in 2013 were legal. In a decision, the...

350 families to receive Limassol Municipality’s ‘Easter package’

The 'social grocery store' of Limassol Municipality has begun delivery on Friday morning of 350 Easter packages to families in need, the CNA reports. According...

Third Age Observatory sounds alarm over old people’s homes

The Third Age Observatory has sounded the alarm over the risk of a coronavirus outbreak at old people's homes. Its chairman Dimos Antoniou said there...

Cybercrime unit warns of blackmail emails

The Cybercrime arm of the police issued on Friday a warning to internet users of scammers circulating blackmail messages via email. The messages contain a...

Taste

Shaken potatoes (antinahtes)

Either you thrash the coriander seeds in a mortar, without making them into dust, or you gradually crush them in a blender. Rinse the potatoes...

Koulouri – finger bread

Thrash (or blend in a mixer) the mastic with the sugar and the mahlepi (if you can’t find it already pounded). Sift the flour...

Gopa with aubergine dip

Preheat the oven to 200°C and pierce the aubergines with a fork or skewer in several places. Cook in the oven till they soften,...

Cyprus coffee

Cyprus coffee is a dark concoction and supplies a rapid caffeine kick to its drinker. Usually, its consumption is a social event. No one...