IMF says Cyprus to face more demographic, productivity challenges

Cyprus’s economy will face in the future serious challenges stemming from aging population and its weakening productivity, the Cyprus News Agency reported citing an official of the International Monetary Fund.

The birth rate drop over the past 10 years will cause increased pressure on pension funds and Cyprus’s healthcare system and subsequently further deteriorate the public debt dynamic, the Cyprus News Agency reported citing Vincenzo Guzzo, the IMF’s representative on the island. Guzzo was addressing delegates at a conference in Nicosia on Tuesday.

The combined effect of unfavourable demographics and deteriorating productivity weaken medium-term prospects and could serve as disincentives to investment, he said adding that structural reforms could help the economy into the opposite direction.

Guzzo said that Cyprus should focus on four reform areas which encompass the consolidation of the banks’ balance sheets and the reduction of bad loans, a commitment to a medium-term fiscal consolidation, the elimination of distortion on the labour and goods markets and encouraging investment in research and development as well as innovation.

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.