The volume of non-performing loans is expected to increase in Cyprus in 2021 as a result of the coronavirus crisis, Central Bank Governor Constantinos Herodotou warned on Tuesday.
However, Herodtou sounded an optimistic note, saying that with proper management the country’s economy could emerge stronger.
Speaking during an economic teleconference in Nicosia, Herodotou said bad debts will not go up this year because of a stay in loan repayment in effect until the end of 2020.
He added that on the bright side, the coronavirus restrictions were lifted early and the income of households and businesses began to recover with the loan repayment suspension still in effect.
“If we manage the situation correctly and we are properly prepared for 2021, I really believe our economy can even emerge stronger and do very well in 2021,” Herodotou said.
Speaking at the same economic teleconference, Finance Minister Constantinos Petrides said Cyprus will follow the same strategy that had helped the economy recover from its worst-ever economic crisis in 2013, which involved a bailout and a banking system resolution.
He said the strategy involves the creation of surpluses by the government, businesses and households, the promotion of structural reforms to increase the competitiveness of the private economy in international markets and the correction of mistakes of the past.
Petrides said managing the large number of non-performing loans, which was a decisive factor in the 2013 recovery, would be such a correction and could prove a decisive factor this time as well.