Finland Times

 

Cyprus officially declared its economy to be out of recession on Wednesday, less than two and a half years after it was bailed out by the Eurogroup and the International Monetary Fund.

 

     "Under international practice, when an economy records a growth for two consecutive quarters it is considered to have come out of recession," government spokesman Victor Papadopoulos said after the Council of Ministers was briefed on the first six-monthly economic report.

 

     Cyprus entered into an economic adjustment program when it signed a 10-billion-euro (11 billion U.S. dollar) financial assistance accord in March 2013, after 11 consecutive quarters of recession that forced it out of international markets.

 

     Papadopoulos said the economic growth both in the first and second quarters of this year was officially put at 1.0 percent.

 

     "This is higher than the 0.4-percent growth projected when the 2015 budget was being prepared and also projected by international lenders and external international organizations," said Papadopoulos.

 

     He said further projections show that 2015 will end in real growth.

 

     Governing DISY party leader Averof Neophytou said official estimates show that the growth at the end of the year will not just be a meager one, but may reach a healthy 2.0 percent, against a recession of 2.5 percent in 2014.

 

     "It means that we are on the road to development, which will gradually lead to the reduction of unemployment and non-performing loans," Papadopoulos added.

 

     Unemployment currently stands at about 15 percent but is going down. Meanwhile, non-performing loans are the biggest headache for banks, which have to cope with bad loans amounting to 26.9 billion euros, or 45.85 percent of total loans.

 

     The Cypriot government insisted right from the get go that it would stick to the implementation of the adjustment program demanded by international lenders, despite criticism from opposition parties, as it was the only way to lead the country out of its economic demise.

 

     Public and private sector employees, as well as pensioners, lost about 17 percent of their income. Additionally, they had to cope with more taxation in the form of new property taxes and hikes on taxes, mainly the Value Added Tax on most goods, which went up from 17 to 19 percent.

 

     The government has promised that a gradual return to pre-crisis salaries and pensions will start as of 2017.