Eurogroup says banks healed, NPLS need to fall to healthier levels

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By Stelios Orphanides

The euro area’s finance ministers said that Cyprus’s banking system has healed after undergoing a deep transformation following the implementation of the €10bn cash-for-reforms deal agreed in March 2013.

“Fiscal performance has exceeded expectations,” the eurogroup, the euro area’s finance minister conference body said on Monday in an emailed statement. “Work must continue with determination to secure the reduction of the non-performing loan ratio to healthier levels. This includes the rigorous and swift implementation of the insolvency framework and foreclosure laws”.

The Eurogroup said that Cyprus did not complete the last prior action which would have helped strengthen growth, as the parliament failed to pass a draft bill for the creation of CyTA Ltd, a company that would have taken over the operations and assets of state-owned telecom Cyprus Telecommunications Authority.

Still, “the eurogroup commends the Cypriot authorities for the overall successful implementation of the programme and the important achievements made in the past three years,” the body said.

“Along with public administration reform and other structural reforms discussed during the programme, this would cement the improvements in public finance and support sustained economic growth,” the eurogroup said.

“Against this background, the eurogroup welcomes the reaffirmed commitment by the Cypriot authorities to sustain public finances consolidation and the reform momentum over the medium term, in order to address the remaining vulnerabilities,” the statement said. “The eurogroup will continue supporting the reform process in Cyprus, inter alia in the context of post-programme surveillance and of the regular EU and euro-area specific monitoring frameworks”.

Cyprus tapped a total of €7.2bn out of a total €10bn earmarked for it bailout in the past three years. The programme with the International Monetary Fund which disbursed a total of €950m “is expected to come to an end today,” the eurogroup said.

Dutch finance minister Jeroen Dijsselbloem, who also chairs the euro area’s finance minister body, said in in a message at his Twitter account that Cyprus’ which saw its economy grow 1.6 per cent last year, that as the financial assistance ends, Cyprus returned to sustainable growth.

“Compliments to ,” he said. “Financial assistance program ends, back on path sustainable growth. Success story with strong commitment government”.

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