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CBC Warning – Risks Remain

Constantinos Philippides
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The economic adjustment program, although hard and painful, is the only choice for the country’s exit from the crisis, says Central Bank of Cyprus (CBC).

At the biannual Economic Bulletin of December 2013 , cautioning , however , that while “there is no room for complacency and we should remain focused on those policies that will help us to restore and strengthen confidence in the financial system and to fortify macroeconomic stability.”

In Economic Bulletin of December 2013, CBC featuring
“In recent evaluations of the program there have been positive divergences in fiscal and financial sector” and stresses that these positive deviations “does not give us the grounds for any adjustments to the program, that we may need” .

Notes, in relation to public finance, that budgetary targets “have so far achieved by significant margins, reflecting the prudent implementation of the state budget, as well as smaller scale deterioration of economic activity than originally planned for 2013.”

As regards the prospects of the economy in 2013-2015, CBC notes the revisions listed in the most recent assessment of the IMF, in accordance with the expected decline in GDP for 2013 at -7.7 %, in compared with -8.7% originally provided in the Memorandum and equal impairment for 2014 (from -3.9 % to -4.8 %) due to prolonged uncertainty.

Specifically , the fiscal deficit as a percentage of GDP was 1.9% during the period under review compared with a deficit of 3.3% in the first nine months of 2012.

A road map has been prepared for the privatisation program, which aims to raise at least €1 billion by the end of 2016 and additional €400 million by 2018, at the latest.

Regarding the gross debt of the general government as a percentage of GDP, CBC relies on preliminary data from the Ministry of Finance, pursuant to which noted “a further significant increase to 112.1 % at the end of the third quarter of 2013 from 86.6% by the end of 2012.”

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