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2 Apr 2014
Cyprus gets next tranche of aid, central bank concerned about bad loans
FXStreet (Łódź) - During the second day of the Eurogroup summit held in Athens, the European Stability Mechanism approved a 150 million euro aid tranche disbursement to Cyprus.
Later on Wednesday the Cyprus central bank Governor Panicos Demetriades said that the country was still struggling under the weight of bad debt and that a lot of “strategic defaults” were taking place. That's why it should be made easier for banks to seize assets of those who default.
“Borrowers need to know that there’s a consequence when you don’t pay,” Demetriades stressed. “It’s still the case that the banks are not able to basically carry out any repossessions in any meaningful timeframe.”
The central bank head said that dealing with the non-performing loans was currently the top priority.
On Tuesday the IMF published a report on the Cyprus's situation, in which it stated that the adjustment program was on track but that the level of bad loans as well as the waning political support for austerity was worrying. The IMF added that the Ukraine crisis could also be harmful for Cyprus, as the island has a close economic relationship with both Kiev and Moscow.
"The Ukraine crisis may lead to capital flight from non-resident depositors of foreign banks in Cyprus, which may affect the business service sector," the IMF said in the report.
Later on Wednesday the Cyprus central bank Governor Panicos Demetriades said that the country was still struggling under the weight of bad debt and that a lot of “strategic defaults” were taking place. That's why it should be made easier for banks to seize assets of those who default.
“Borrowers need to know that there’s a consequence when you don’t pay,” Demetriades stressed. “It’s still the case that the banks are not able to basically carry out any repossessions in any meaningful timeframe.”
The central bank head said that dealing with the non-performing loans was currently the top priority.
On Tuesday the IMF published a report on the Cyprus's situation, in which it stated that the adjustment program was on track but that the level of bad loans as well as the waning political support for austerity was worrying. The IMF added that the Ukraine crisis could also be harmful for Cyprus, as the island has a close economic relationship with both Kiev and Moscow.
"The Ukraine crisis may lead to capital flight from non-resident depositors of foreign banks in Cyprus, which may affect the business service sector," the IMF said in the report.