Cyprus and International, Economic Analysis

Cyprus Quarterly Economic Monitor, Year 1, Issue 2

Cyprus Quarterly Economic Monitor
Authors: G. Hardouvelis, I. Gkionis
Publication: August 2016, Year 1, Issue 2

Key points:

  • The economy continued to surprise positively in the second quarter of the year
  • BREXIT doesn’t entail only challenges but also presents significant opportunities for the Cypriot economy as long as authorities take the right steps
  • New bond issuance paves the way for the streamlining of debt repayments in 2019-2020
  • Fiscal consolidation achievements in the 2013-2015 MoU era allow for greater policy flexibility in the medium-term without compromising debt sustainability
  • The main risks ahead are concentrated in the financial sector and the ability to quickly reduce the high NPL ratio
  • Another risk is complacency following the exit from the Adjustment Program: Cyprus has a political window of one year to carry on with the remaining reforms in the public sector and in privatizations

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