Insider Economy Cyprus’ economic adjustment programme largely effective in achieving goals

Cyprus’ economic adjustment programme largely effective in achieving goals

Cyprus’ economic adjustment programme has been largely effective in achieving its objectives of stabilising the financial sector, restoring fiscal sustainability and implementing structural reforms, according to an Ex-Post Evaluation of the Economic Adjustment Programme report released recently.

However, the programme which was implemented between  April 2013 and March 2016 has been less effective in changing fundamentally the banks’ business model and in making the country’s growth more sustainable and balanced, it also said.

The report was carried out by a team of European Commission economists who had not been involved in the programme supported by financial assistance from the European Stability Mechanism (ESM) and the International Monetary Fund (IMF).

It also noted that even though external factors also contributed favourably and allowed Cyprus to regain market access dangers are still there.

“While the overall situation of the Cypriot financial sector gradually improved after its stabilisation was achieved at the beginning of the programme, the Cypriot banking sector remained subject to high risks at the end of the programme,” it said.

“Following the initial stabilisation of the financial sector, with the benefit of hindsight, the programme could have been more efficient by pursuing a more comprehensive strategy on Non Performing Loans and a more determined approach on the cooperative banking system, which however met political resistance from the Cypriot side,” it added.

Nonetheless, the report said that due to cautious macroeconomic projections and a prudent fiscal consolidation path, surprises were always on the upside. A broad range of fiscal-structural and structural reforms was implemented.

The crisis and the adjustment process had less of a negative social impact than could be expected, also because of programme measures to improve the targeting of social spending and to minimise the effects on vulnerable groups.

The overall policy approach to fiscal consolidation, pension and welfare reform, and the revamp of fiscal governance was efficient.

The report underlined that an important lesson from Cyprus is that delaying the start of a programme by recourse to other financing sources, e.g. bilateral loans, should be avoided as it may increase the costs of a crisis and the risks of a programme.


Read more:










Top Stories

T/Cypriot police shoot, injure two irregular migrants

    Turkish Cypriot police shot and injured two irregular migrants who tried to avoid arrest, the online edition of the Turkish Cypriot newspaper Yeniduzen reports. It...

Turkish verdict paving way for Hagia Sophia mosque expected Friday – officials

    A Turkish court is likely to announce on Friday that the 1934 conversion of Istanbul's Hagia Sophia into a museum was unlawful, two Turkish...

More credit card use for small purchases amid pandemic

  Kiosks and newsagents saw a 103% increase in credit card transactions, while travel related business recorded a 91% decrease in the quarter ending June...

Tried and Tasted: Bistro 961

The wonderful, aromatic flavours of the Middle East are an eternally welcome guest in my stomach. So when I found out that a sweet...

Multinational aeronautical exercise off Cyprus (photos, video)

    A multinational aeronautical exercise was carried out south of Limassol on Wednesday with the participation of four countries -- Cyprus, Greece, France and Italy,...


How to make triandafillo ice cream, by UK Cypriot chef Loulla Astin

  Just in time for the scorching heat, UK Cypriot chef Loulla Astin has shared her recipe for refreshing triantafillo ice cream -- or as...

Cyprus sprouts with cream and prosciutto

In a big, deep frying pan, fry the prosciutto in the olive oil, on medium heat for 2 minutes. Add the onion and garlic...

Pork burger with sundried tomatoes, mozzarella and anchovies

Mix all the ingredients together with the mince in a bowl, and combine well. Divide into 4 balls and form the burgers. Warm a griddle/pan...


Wash the lamb cauls with plenty of cold water and let them settle in water and vinegar for a little while. Soak the bread crumbs...