IMF revises upward projection on Cyprus's growth, non-performing loans mark sharp fall

Source: Xinhua| 2018-10-09 22:59:24|Editor: yan
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NICOSIA, Oct. 9 (Xinhua) -- The International Monetary Fund (IMF) has revised upwards its projections on bailed-out Cyprus's economic growth, at a time when the European Banking Authority announced a sharp drop in non-performing loans, statements said on Tuesday.

The IMF said in a report on its autumn estimates that it expects the Cypriot economy to grow 4.0 percent this year, 0.4 percentage point over its spring projections.

It said that it expected an even more marked expansion of 4.2 percent of the economy in 2019, an increase by 1.2 percentage points relative to its previous estimate.

Cyprus's current economic growth is one of the highest in Europe as the economy continues its steady expansion which started about three years ago.

The IMF report said a 0.8 percent inflation in 2018 is expected relative to last year, with prices picking up by 1.8 percent in 2019.

It was the first time a positive inflation is to be recorded following a continuous deflation since 2013, when Cyprus was pulled back from the brink of bankruptcy in a 10-billion-euro assistance package offered by the Eurogroup and the IMF.

In a separate statement, the European Banking Authority (EBA), said that non-performing loans (NPLs) which had haunted the banking system since its 2013 resolution fell sharply in the second quarter this year.

It said that NPLs fell by 3.1 billion euros, or 19 percent, to 13.2 billion euros, compared to 16.3 billion euros at the end of the first quarter this year.

That was the largest reduction of bad loans and came as a result of a sale of NPLs worth 2.8 billion euros by Bank of Cyprus.

The reduction brought the ratio of bad loans to 24.1 percent, down from 39 percent at the end of the first quarter and from 52 percent of total facilities at the start of the 2013 crisis.

Despite the sharp reduction, Cyprus remains second behind Greece, with a ratio of 44.8 percent of non-performing facilities.

Economic analysts predicted that the announcement on the NPLs reduction may contribute to international rating agencies moving Cyprus's credit ratings clearly into the investment grade. (1 euro = 1.14 U.S. dollars)