Following the conclusion of the fourth review of Cyprus’ adjustment program, it was indicated that the program remains on track, but challenges remain for the Cypriot authorities.

Steady progress has been made towards the program objectives, which is the restoration of financial stability and fiscal sustainability and structural reforms.

The Troika has revised its projections for 2014, anticipating a contraction of the economy of 4,2%, instead of 4,8% projected initially, as the economy continues to be more resilient than was thought at the beginning of the program.

The lenders also anticipate now a lower deficit for 2014. Primary deficit for this year is anticipated to reach 1,7%, compared to 1,8% forecasted during the last mission, and the headline deficit is projected to reach 5,3% for 2014, instead of 5,8% projected before.

However, Cyprus’ lenders believe that challenges remain with regard to non performing loans (NPLs), fiscal targets and structural reforms. Restructuring of the financial sector has progressed as well, however addressing the issue of NPLs is very urgent as they are approaching 50% of the loan book and they are linked with liquidity.

It was stated that the Cypriot authorities have made good progress in addressing the budgetary problems, but still there is quite some way to go to achieve the agreed fiscal targets and the necessary surplus.

The third challenge is the need to keep up the current reform drive, specifically the introduction of the Guaranteed Minimum Income, reform of tax administration, privatisations, health care reform, immovable property tax and further reform of the administration.

The Government has provided the Troika with the cornerstones of the healthcare reform and it was agreed that in first instance the national healthcare system will be implemented as single payer system and a study will be carried out to show whether is possible and if so when to open up the system to other insurances as well (Source: www.reuters.com).Following the conclusion of the fourth review of Cyprus’ adjustment program, it was indicated that the program remains on track, but challenges remain for the Cypriot authorities.

Steady progress has been made towards the program objectives, which is the restoration of financial stability and fiscal sustainability and structural reforms.

The Troika has revised its projections for 2014, anticipating a contraction of the economy of 4,2%, instead of 4,8% projected initially, as the economy continues to be more resilient than was thought at the beginning of the program.

The lenders also anticipate now a lower deficit for 2014. Primary deficit for this year is anticipated to reach 1,7%, compared to 1,8% forecasted during the last mission, and the headline deficit is projected to reach 5,3% for 2014, instead of 5,8% projected before.

However, Cyprus’ lenders believe that challenges remain with regard to non performing loans (NPLs), fiscal targets and structural reforms. Restructuring of the financial sector has progressed as well, however addressing the issue of NPLs is very urgent as they are approaching 50% of the loan book and they are linked with liquidity.

It was stated that the Cypriot authorities have made good progress in addressing the budgetary problems, but still there is quite some way to go to achieve the agreed fiscal targets and the necessary surplus.

The third challenge is the need to keep up the current reform drive, specifically the introduction of the Guaranteed Minimum Income, reform of tax administration, privatisations, health care reform, immovable property tax and further reform of the administration.

The Government has provided the Troika with the cornerstones of the healthcare reform and it was agreed that in first instance the national healthcare system will be implemented as single payer system and a study will be carried out to show whether is possible and if so when to open up the system to other insurances as well (Source: www.reuters.com).