COVID19: Cyprus economy enters recovery mode

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Green shoots of recovery are emerging post-COVID-19 lockdown as the economy begins to breathe again, said Finance Minister Constantinos Petrides.

Cyprus President Nicos Anastasiades and Petrides discussed the battered economy with the CEOs of Cypriot commercial banks after the launching of the second raft of government support measures.

The close to €2 bln package contains interest rate subsidies and VAT reductions for the tourism sector and guarantees to the European Investment Bank for cheap loans to businesses through local banks.

“It was a very constructive discussion, we are in the recovery phase, both government and the banking sector will contribute with the means at their disposal towards that end,” said Petrides

“Market sentiment is changing and this is very important,” he added.

On the interest rate subsidy, Petrides said it was very important assistance and that while entering this second phase the banks will do their bit to support the economy.

“And we have every right to be very optimistic that we will manage to emerge victorious from this crisis.”

Petrides said, “the first signs concerning the economy and the labour market following the partial lifting of restrictions are very positive and we have every right to be optimistic.”

He the government support measures “have acted as a catalyst”.

Petrides said GDP growth registered in recent years has given public finances and the economy the resilience necessary to cope with the coronavirus crisis.

“Of course, there are problems, currently our plans are more targeted but we are convinced we will emerge victorious from this uncertain battle.”

“This is the positive message we should give as we enter the restart phase.”

Ioannis Matsis, President of the Association of Cyprus Banks (ACB) assured that the banks have the intention, the liquidity and the capital buffers to support the economy.

He said that measures such as interest rate subsidies and loans through the EIB will give the banks greater capacity to provide loans.

Matsis noted that since the relaxation of lockdown measures and by monitoring credit and debit card movement and other data “we have seen the economy expanding rapidly.”

“Therefore, things seem better than our April estimates and we are very optimistic.”

“It would be beneficial for all, society, the economy and the banks, to proceed with (granting of) financing and liquidity.”

But Matsis noted that “schemes announced by the government will bring increase volume (to the banks) and will be very helpful.”