Auditor General Odysseas Michaelides and a delegation from the Troika of international lenders, visiting Cyprus for the fourth assessment of the bailout programme, discussed the thorny issue of non performing loans (NPLs) at the rescued banks and high lending rates.
“We raised issues concerning the banks, particularly the NPLs and high lending rates, which hinder economic growth,” Michaelides told the press after the meeting.
“In general, we gave the picture that the economic adjustment programme (conditional to the 10 bln euro bailout) is being implemented well and we are moving in the right direction.” Michelides said.
On the NPLs, which have reached a worrying 50% of all loans at the biggest lender Bank of Cyprus, he said that “we must strike the right balance in order for the banks to cope with this situation and start lending to small and medium sized enterprises, but without creating insurmountable problems to the citizens, especially the ones in need.”
On the reduction in high lending rates, Michaelides said that this would ultimately result from the development of the banks.
The head of the Audit Office also said there was a need to increase its personnel and grant the Office greater independence, pointing out that “it cannot depend on the Finance Ministry for the approval of its budget”.
The Troika inspectors continued their scheduled meetings with Finance Minister Haris Georgiades, Labour Minister Zeta Emilianides a delegation from the Institute of Certified Public Accountants of Cyprus (ICPAC), the Chairman of the Co-operative Central Bank Trusteeship Nicolas Hadjiyiannis and General Manager Marios Clerides, as well as with a team of technocrats from the Bank of Cyprus.
The officials have already heard that the implementation of the National Health Scheme is behind schedule, that the construction sector is suffering and its labour force has shrunk from 40,000 to 28,000, while hoteliers want lending to return as soon as possible, as many properties need repairs and investments, necessary to remain competitive among the traditional British and new Russian tourist markets, with the latter expected to grow by 5-10% this year.
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