Commission technocrat calls for consensus in promoting structural reforms

EU Financial technocrat called on the government and political parties to reach consensus with regard to structural reforms that would make the Cypriot economy more resilient in a possible future financial crisis.

Cyprus is in a very comfortable position, marked by high growth, job creation, the fiscal position is under control, non-performing loans are high but going down. But the next crisis could be around the corner and Cyprus must be prepared. You must implement reforms, Manfred Bergmann, Director in the EU Directorate � General for Economic and Financial Affairs told Cypriot lawmakers.

Bergman is in Cyprus to meet with Cypriot government officials and other stakeholders in the context of visits to member-states in view of the next country-specific report for the European semester.

Stating that the 2017 Commission’s report for Cyprus showed limited or no progress concerning reforms in various fields, Bergman pointed out that this is partly due to the fact that the Cypriot government does not have majority in the Parliament.

I would encourage you to think about finding compromises, because what Cyprus does not need at all is a paralysed Parliament in the good times, because we will have to wait for the bad times to fix the problems, he said speaking to a joint meeting of the parliamentary committees of Finance and Labour, adding you fix the roof when the sun is shining.

Marked by an oversized banking sector with rising NPLs and excluded from the international capital markets, Cyprus concluded in March 2013 on a Euros 10 billion bailout with the EU and the IMF, that featured un unprecedented haircut of deposits over Euros 100,000. Cyprus exited its bailout in 2016. The crisis left the banking sector with NPLs amounting to 21 billion close to 50% of the total loans, the second highest in the EU.

Bergmann, who is in supervising eight member-states facing macroeconomic imbalances, including Cyprus, also said transition could be tricky as it affects people favoured by the status quo.

I learned that Cyprus seems to be an economy in transition. New sectors needed, new sectors developing, traditional sectors like tourism are changing. But transition is a dangerous period because transitions needs changes and people who are doing well in the status quo do not want changes and you have to convince them, he noted.

Speaking for the EU in general, Bergmann said that following the 2008 financial crisis that turned into a sovereign debt crisis in the EU, progress in economic performance has been observed in all member-states partly due to reforms and partly due to the favourable economic conditions describing the EU.

As we say, the sun is shining over the EU economy, but the questions we cannot enter into complacency to say that all is under control, he noted noting however that structural reforms take time and cannot happen in a year.

On the next EU country-specific recommendation report for Cyprus to be release later in the year, Bergmann said the report will include similar recommendation as in 2017.

Marios Mavrides acting president of the Finance Committee said they have been told that some but very limited progress concerning structural reforms was made.

Source: Cyprus News Agency