Economy to stagnate in 2015 amid soaring NPLs: EBRD

By Stelios Orphanides

Cyprus’ economy will stagnate in 2015 after shrinking 3.5 per cent this year, the European Bank of Reconstruction and Development (EBRD), which decided in May this year to commence operations on the island, said.

“The Cyprus economy remains in deep recession, but signs of confidence and optimism are becoming increasingly apparent,” EBRD said in its September Regional Economic Prospects for the countries the bank operates in.

The output drop of 5.4 per cent last year, compared with 2.4 per cent the previous before, “was less severe than expected,” EBRD added.

EBRD, which participated in Bank of Cyprus’ capital increase in August, owns just over five per cent of the Cypriot lender’s share capital, making it the fourth biggest shareholder.

The report added the Cypriot economy “faces severe problems, not least in the banking sector where most lending has dried up and non-performing loans are around a staggering 50 per cent of the total. There is more than usual uncertainty surrounding the 2015 forecast but we expect a bottoming out of the economy by then, with zero growth for the year.”

The London-based lender provides project financing for banks, industries and business and also works with publicly owned companies.

In May, the EBRD agreed to to provide up to €700 million of financing to Cyprus over the next six years to help it weather the eurozone debt crisis.

The Cyprus Mail is the only English-language daily newspaper published in Cyprus. It was established in 1945 and today, with its popular and widely-read website, the Cyprus Mail is among the most trusted news sites in Cyprus. The newspaper is not affiliated with any political parties and has always striven to maintain its independence. Over the past 70-plus years, the Cyprus Mail, with a small dedicated team, has covered momentous events in Cyprus’ modern history, chronicling the last gasps of British colonial rule, Cyprus’ truncated independence, the coup and Turkish invasion, and the decades of negotiations to stitch the divided island back together, plus a myriad of scandals, murders, and human interests stories that capture the island and its -people. Observers describe it as politically conservative.