{
  "title": "Cyprus: Staff Report for the 2014 Article IV Consultation",
  "publication": "IMF Staff Country Reports, October 22, 2014",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2016/12/31/cyprus-staff-report-for-the-2014-article-iv-consultation-42406",
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  "summary": "KEY ISSUES Background: The large imbalances that accumulated prior to the global financial crisis culminated in a collapse of the banking sector in early 2013.",
  "sections": [
    {
      "heading": "Background",
      "content": "- Large imbalances accumulated prior to the global financial crisis culminated in a collapse of the banking sector in early 2013.\n- Authorities adopted an economic adjustment program, supported by official financing, aimed at securing financial stability and fiscal sustainability."
    },
    {
      "heading": "Recent developments and outlook",
      "content": "- GDP contracted sharply in 2013.\n- Wages and prices declined, and unemployment increased.\n- Bank deposit outflows have slowed, but non-performing loans have risen sharply, and credit remains impaired.\n- The recession is expected to continue this year, followed by a modest recovery starting next year.\n- Risks remain tilted to the downside."
    },
    {
      "heading": "Reform agenda and policy recommendations",
      "content": "- Overcome recent delays in the implementation of the adjustment program.\n- Address high non-performing loans by:\n  - Putting in place a strong private-sector debt-restructuring framework.\n  - Enacting legislation to facilitate foreclosures.\n  - Modernizing the insolvency regime.\n- Banks should continue to restructure and build strong capital buffers.\n- Proceed prudently with the removal of external-payment restrictions.\n- Continue fiscal consolidation to ensure long-run sustainability.\n- Firmly implement structural reforms."
    },
    {
      "heading": "Subject areas and keywords",
      "content": "- Subjects: Banking, Commercial banks, Financial institutions, Nonperforming loans, Public debt, Public financial management (PFM), Revenue administration\n- Keywords: Commercial banks, CR, Cyprus case, deficit-to-GDP ratio, Europe, GDP, GDP revision, Global, IMF staff estimate, ISCR, liability positions vis-à-vis nonresident, macroeconomic situation, nominal GDP, Nonperforming loans\n\n---\n\n Content in this bundle\n\n- Cr14313\n  - Cr14313 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Cr14313 (PDF){rel=\"external\" type=\"application/pdf\"}"
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    "Published: October 22, 2014",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9781498340793.002",
    "Large imbalances accumulated prior to the global financial crisis culminated in a collapse of the banking sector in early 2013.",
    "Authorities adopted an economic adjustment program, supported by official financing, aimed at securing financial stability and fiscal sustainability.",
    "GDP contracted sharply in 2013.",
    "Wages and prices declined, and unemployment increased.",
    "Bank deposit outflows have slowed, but non-performing loans have risen sharply, and credit remains impaired.",
    "The recession is expected to continue this year, followed by a modest recovery starting next year.",
    "Risks remain tilted to the downside.",
    "Overcome recent delays in the implementation of the adjustment program.",
    "Address high non-performing loans by:",
    "Banks should continue to restructure and build strong capital buffers.",
    "Proceed prudently with the removal of external-payment restrictions.",
    "Continue fiscal consolidation to ensure long-run sustainability.",
    "Firmly implement structural reforms.",
    "Subjects: Banking, Commercial banks, Financial institutions, Nonperforming loans, Public debt, Public financial management (PFM), Revenue administration",
    "Keywords: Commercial banks, CR, Cyprus case, deficit-to-GDP ratio, Europe, GDP, GDP revision, Global, IMF staff estimate, ISCR, liability positions vis-à-vis nonresident, macroeconomic situation, nominal GDP, Nonperforming loans",
    "**Cr14313**"
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